Q2 2024 Old Dominion Freight Line Inc Earnings Call

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Operator: Good morning, and welcome to the Old Dominion Freight Line second quarter 2024 earnings conference call. All participants will be in listen-only mode.

Speaker Change: Good morning and welcome to the Old Dominion Freight Line second quarter 2024 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your telephone keypad.

Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2.

Jack Atkins: I would now like to turn the conference over to Jack Atkins, Director of Investor Relations. Please go ahead.

Operator: To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Jack Atkins, Director of Investor Relations. Please go ahead. Thank you, Gary. And good morning, everyone.

Speaker Change: Please note, this event is being recorded.

Speaker Change: I would now like to turn the conference over to Jack Atkins, Director of Investor Relations. Please go ahead.

Jack Atkins: Thank you, Gary, and good morning, everyone, and welcome to the 2nd quarter 2024 conference call for Old Dominion Freight Line.

Jack Lawrence Atkins: And welcome to the second quarter 2024 conference call for Old Dominion Freight. Today's call is being recorded and will be available for replay beginning today and through July 31, 2024 by dialing 1-877-344-7529, access code 9201305. The replay of the webcast may also be accessed for 30 days at the company's website. This conference call may contain forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion's expected financial and operating costs.

Jack Lawrence Atkins: Thank you, Gary, and good morning, everyone, and welcome to the second quarter 2024 conference call for Old Dominion Freight Line.

Speaker Change: Today's call is being recorded and will be available for replay beginning today and through July 31, 2024 by dialing 1-877-344-7529, access code 9201305.

Speaker Change: The replay of the webcast may also be accessed for 30 days at the company's website.

Jack Atkins: This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. Without limiting the foregoing, the words, "the leaves," anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Old Dominion's filings with the Securities and Exchange Commission and in this morning's usually.

Speaker Change: This conference call may contain forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion's expected financial and operating performance.

Jack Lawrence Atkins: For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements.

Speaker Change: For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements.

Speaker Change: Without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements.

Speaker Change: You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Old Dominion's filings with the Securities and Exchange Commission and in this morning's news release, and, consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements.

Jack Atkins: And consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

Speaker Change: The company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

Jack Atkins: As a final note before you begin, we welcome your questions today but ask that you limit yourself to just one question at a time before returning to the queue.

Speaker Change: As a final note before we begin, we welcome your questions today, but ask that you limit yourself to just one question at a time before returning to the queue.

Morty Freeman: At this time, I would like to turn the conference call over to Mr. Morty Freeman, the company's president and chief executive officer for opening remarks. Morty, please go ahead, sir.

Jack Lawrence Atkins: You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Old Dominion's filings with the Securities and Exchange Commission and in this morning's news release, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statement. The company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. As a final note before we begin, we welcome your questions today, but ask that you limit yourself to just one question at a time before returning to, At this time, I would like to turn the conference call over to Mr. Morty Freeman, the company's President and Chief Executive Officer, for opening remarks. Morty, please go ahead.

Speaker Change: At this time, I would like to turn the conference call over to Mr. Morty Freeman, the company's President and Chief Executive Officer, for opening remarks. Morty, please go ahead, sir.

Kevin M. Freeman: Good morning, and welcome to our second quarter conference call. With me today on the call is Adam Satterfield, our CFO. After some brief remarks, we will be glad to take your questions.

Morty Freeman: Good morning, and welcome to our second quarter conference call. With me today on the call is Adam Satterfield, our CFO. After some brief remarks, we will be glad to take your questions. Old Dominion's second quarter results represent our third consecutive quarter with year-over-year growth in revenue and earnings per diluted share, despite the ongoing sluggish and domestic economy. These results were made possible by the hard work and dedication of the OD family of employees who continued to execute our long-term strategic plan during the second quarter. I'd like to congratulate our outstanding team for maintaining our commitment to providing superior customer service at a fair price, as well as our disciplined approach to managing yield.

Speaker Change: Good morning and welcome to our second quarter conference call. With me today on the call is Adam Satterfield, our CFO .

Speaker Change: After some brief remarks, we will be glad to take your questions.

Kevin M. Freeman: Old Dominion second quarter results represent our third consecutive quarter with year-over-year growth in revenue and earnings per diluted share, despite the ongoing sluggishness in the domestic economy. These results were made possible by the hard work and dedication of the OD family of employees who continued to execute our long-term strategic plan during the second quarter. I'd like to congratulate our outstanding team for maintaining our commitment to providing superior customer service at a fair price, as well as our disciplined approach to managing yield, our laser focus on operating efficiencies, and controlling our discretionary spending. Delivering superior service at a fair price is the cornerstone of our business model, and our unmatched value proposition has continued to differentiate Old Dominion Freight Line from our competition.

Speaker Change: Old Dominion second quarter results represent our third consecutive quarter with year-over-year growth in revenue and earnings per diluted share, despite the ongoing sluggish in the domestic economy.

Speaker Change: These results were made possible by the hard work and dedication of the OD family of employees who continued to execute our long-term strategic plan during the second quarter.

Speaker Change: I'd like to congratulate our outstanding team for maintaining our commitment to providing superior customer service at a fair price, as well as our disciplined approach to managing yield, our laser focus on operating efficiencies and controlling our discretionary spending.

Morty Freeman: Our laser focus on operating efficiencies and controlling our discretionary spending. Delivering superior service at a fair price is the cornerstone of our business model, and our unmatched value proposition has continued to differentiate Old Dominion Freight Live from our competition. I'm pleased to report that during the second quarter we once again provided an on-time service level of 99% and a cargo claims ratio of 0.1%. Constantly delivering the level of service for our customers, regardless of the economic cycle, has strengthened our customer relationships over time. We help our customers keep their promises. They have made to their customers by delivering their freight on time and damage-free, which in turn allows us to continue to help the world keep their promises.

Speaker Change: Delivering superior service at a fair price is the cornerstone of our business model and our unmatched value proposition has continued to differentiate Old Dominion Freight Line from our competition.

Kevin M. Freeman: I'm pleased to report that during the second quarter, we once again provided an on-time service level of 99% and a cargo claims ratio of 0.1%. Constantly delivering the level of service for our customers regardless of the Economic Cycle has strengthened our customer relationships over time. We help our customers keep their promises they have made to their customers by delivering their freight on time and damage-free, which in turn allows us to continue to help the world keep its promises. The consistency of our service is also validated by Mastio and Company, who have named OD as the number one national LTL carrier for 14 consecutive years.

Speaker Change: I'm pleased to report that during the second quarter we once again provided an on-time service level of 99% and a cargo claims ratio of 0.1%.

Speaker Change: Constantly delivering the level of service for our customers regardless.

Speaker Change: of the Economic Cycle has strengthened our customer relationships over time.

Speaker Change: We help our customers keep their promises they have made to their customers by delivering their freight on time and damage free, which in turn allows us to continue to help the world keep their promises.

Morty Freeman: The consistency of our service is also validated by a Mastio and Company, who has named OD as the number one national LTL carrier for 14 consecutive years. Our strong track record of industry-leading service also means our customers view us as a trusted partner, which supports our consistent cost-based approach to pricing. Our long-term yield management strategy is designed to help offset our cost inflation while also supporting further investment in the capacity and technology that our customers expect. We have been one of the only LTL carriers to constantly and consistently invest in new capacity over the past 10 years, which has supported our ability to almost double our market share over the same period.

Speaker Change: The consistency of our service is also validated by Mastio and Company who has named OD as the number one national LTL carrier for 14 consecutive years.

Kevin M. Freeman: Our strong track record of industry-leading service also means our customers view us as a trusted partner, which supports our consistent cost-based approach to price. Our long-term yield management strategy is designed to help offset our cost inflation while also supporting further investment in the capacity and technology that our customers expect. We have been one of the only LTL carriers to constantly and consistently invest in new capacity over the past 10 years, which has supported our ability to almost double our market share over the same period.

Speaker Change: Our strong track record of industry-leading service also means our customers view us as a trusted partner, which supports our consistent cost-based approach to pricing.

Speaker Change: Our long-term yield management strategy is designed to help offset our cost inflation, while also supporting further investment in the capacity and technology that our customers expect.

Speaker Change: We have been one of the only LTL carriers to constantly and consistently invest in new capacity over the past 10 years, which has supported our ability to almost double our market share over the same period.

Morty Freeman: We are committed to constantly investing ahead of our anticipated growth curve, which is another differentiating quality for all the minion and what has been and what we believe will continue to be a capacity constrained industry. Over the past 10 years, we have invested over $2 billion in our service center network, and we plan to invest another $350 million on real estate this year. These investments have positioned us to grow with our customers over time through the ups and downs of the economic side. Medical, which hasn't been the case with most of our competitors, maintaining excess capacity in our service center network, which has approximately 30% at the end of the second quarter, does create some short-term cost headlines during periods with slower demand, but we are confident that the capacity will be critical to support our customers when the economic environment starts to improve and business levels re-excelerate.

Kevin M. Freeman: We are committed to constantly investing ahead of our anticipated growth curve, which is another differentiating quality for Old Dominion and what has been and what we believe will continue to be a capacity-constrained industry. For the past 10 years, we have invested over $2 billion in our service center network, and we plan to invest another $350 million in real estate this year.

Speaker Change: We are committed to constantly investing ahead of our anticipated growth curve, which is another differentiating quality for Old Dominion and what has been and what we believe will continue to be a capacity-constrained industry.

Speaker Change: Over the past 10 years, we have invested over $2 billion in our service center network and we plan to invest another $350 million on real estate this year. These investments have positioned us to grow with our customers over time through the ups and downs of the economic cycle.

Kevin M. Freeman: These investments have positioned us to grow with our customers over time through the ups and downs of the economic cycle, which hasn't been the case with most of our competitors. However, maintaining excess capacity in our service center network, which was approximately 30% at the end of the second quarter, does create some short-term cost headwinds during periods with slower demand. But we are confident that capacity will be critical to support our customers when the economic environment starts to improve and business levels reaccelerate.

Speaker Change: which hasn't been the case with most of our competitors. Maintaining excess capacity in our service center network, which has approximately 30% at the end of the second quarter, does create some short-term cost headwinds during periods with slower demand.

Speaker Change: But we are confident that the capacity will be critical to support our customers when the economic environment starts to improve and business levels re-accelerate.

Morty Freeman: With all that said, our network investments are not being made simply to handle the overflow during stronger periods of economic activity. Instead, as we look into the future, we believe demand for service-sensitive LTF capacity will continue to grow. We believe that the combination of our best class service and discipline investments in network capacity positioned us to capture even more of the growing market in the years ahead. Over the last decade, Old Dominion Freight Line has won more market share than any other LTF carrier by consistently executing our strategic plan and remaining focused on long-term opportunities instead of short-term challenges.

Kevin M. Freeman: With all that said, our network investments are not being made simply to handle the overflow during stronger periods of economic activity. Instead, as we look into the future, we believe demand for service-sensitive LTF capacity will continue to grow. We believe that the combination of our best-in-class service and disciplined investments in network capacity positions us to capture even more of the growing market in the years ahead. Over the last decade, Old Dominion Freight Line has won more market share than any other LTL carrier by consistently executing its strategic plan and remaining focused on long-term opportunities instead of short-term challenges.

Speaker Change: With all that said, our network investments...

Speaker Change: are not being made simply to handle the overflow during stronger periods of economic activity. Instead, as we look into the future, we believe demand for service-sensitive LTF capacity will continue to grow.

Speaker Change: We believe that the combination of our best-in-class service and discipline investments and network capacity position us to capture even more of the growing market in the years ahead.

Speaker Change: Over the last decade, Old Dominion Freight Line has won more market share than any other LTL carrier by consistently executing our strategic plan and remaining focused on long-term opportunities instead of short-term challenges.

Morty Freeman: While we continue to wait on a recovery in the domestic economy, we believe the investments in our network, our technology, and most importantly, our people will continue to drive value to our customers as a result. We believe we are the best position carrier in our industry to win market share over the long term, while further enhancing shareholder value.

Kevin M. Freeman: While we continue to wait on a recovery in the domestic economy, we believe the investments in our network, our technology, and most importantly, our people, will continue to drive value to our customers. As a result, we believe we are the best-positioned carrier in our industry to win market share over the long term, while further enhancing shareholder value. Thank you for joining us this morning, and now Adam will discuss our second quarter financial results in greater detail. Adam.

Speaker Change: While we continue to wait on a recovery in the domestic economy, we believe the investments in our network, our technology, and most importantly, our people, will continue to drive value to our customers. As a result,

Speaker Change: We believe we are the best position carrier in our industry to win market share over the long term while further enhancing shareholder value.

Morty Freeman: Thank you today for joining us this morning, and now Adam will discuss our second quarter financial results in greater detail.

Speaker Change: Thank you today for joining us this morning, and now Adam will discuss our second quarter financial results in greater detail. Adam.

Adam Satterfield: Adam. Thank you, Marty, and good morning. Old Dominion's revenue for the second quarter of 2024 of $1.5 billion was a 6.1 percent increase from the prior year. The increase in revenue was due to a 4.4 percent increase in LTO revenue per hundred weight and a 1.9 percent increase in LTO tons per debt. Our operating ratio improved to 71.9 percent, which contributed to the 11.3 percent increase in earnings for the looted share to a dollar and 48 cents for the quarter. On a sequential basis, our revenue per day for the second quarter increased 2.6 percent when compared to the first quarter of 2024, with LTO tons per day increasing 3.3 percent and LTO shipments per day increasing 3.2 percent.

Adam N. Satterfield: Thank you, Marty, and good morning. Old Dominion's revenue for the second quarter of 2024 was $1.5 billion, a 6.1% increase from the prior year. The increase in revenue was due to a 4.4% increase in LTL revenue per hundredweight and a 1.9% increase in LTL tons per day. Additionally, our operating ratio improved to 71.9%, which contributed to the 11.3% increase in earnings per diluted share to $1.48 for the quarter. On a sequential basis, our revenue per day for the second quarter increased 2.6% when compared to the first quarter of 2024, with LTL tons per day increasing 3.3% and LTL shipments per day increasing 3.2%.

Adam N. Satterfield: Thank You Marty and good morning. Old Dominion's revenue for the second quarter of 2024 of 1.5 billion dollars was a 6.1 percent increase from the prior year.

Adam N. Satterfield: The increase in revenue was due to a 4.4% increase in LTL revenue per hundredweight and a 1.9% increase in LTL tons per day.

Adam N. Satterfield: Our operating ratio improved to 71.9%, which contributed to the 11.3% increase in earnings per diluted share to $1.48 for the Corps.

Adam N. Satterfield: On a sequential basis, our revenue per day for the second quarter increased 2.6% when compared to the first quarter of 2024, with LTL tons per day increasing 3.3% and LTL shipments per day increasing 3.2%.

Adam Satterfield: For comparison, the 10-year average sequential change for these metrics includes an increase of 8.7 percent in revenue per day, an increase of 5.8 percent in tons per day, and an increase of 6.5 percent in shipments per day. The monthly sequential changes in LTO tons per day during the second quarter for as follows. April increased 0.4 percent as compared to March, may increase 0.1 percent as compared to April, and June increased 1.9 percent as compared to May. The 10-year average change for these respective months is a decrease of 0.4 percent in April, an increase of 2.7 percent in May, and an increase of 2.3 percent in June.

Adam N. Satterfield: For comparison, the 10-year average sequential change for these metrics includes an increase of 8.7% in revenue per day, an increase of 5.8% in tons per day, and an increase of 6.5% in shipments per day. The monthly sequential changes in LTL tons per day during the second quarter were as follows: April increased 0.4% as compared to March.

Adam N. Satterfield: For comparison, the 10-year average sequential change for these metrics includes an increase of 8.7% in revenue per day, an increase of 5.8% in tons per day, and an increase of 6.5% in shipments per day.

Adam N. Satterfield: The monthly sequential changes in LTL tons per day during the second quarter were as follows.

Adam N. Satterfield: April increased 0.4% as compared to March.

Adam N. Satterfield: May increased 0.1% as compared to April, and June increased 1.9% as compared to May. The 10-year average change for these respective months is a decrease of 0.4% in April, an increase of 2.7% in May, and an increase of 2.3% in June. I would like to note, however, that in years when Good Friday occurs in March, as it did this year, the average sequential change in LTL tons per day from March to April is a 2.6% increase.

Adam N. Satterfield: May increased 0.1% as compared to April , and June increased 1.9% as compared to May.

Adam N. Satterfield: The 10-year average change for these respective months is a decrease of 0.4% in April , an increase of 2.7% in May, and an increase of 2.3% in June .

Adam Satterfield: I would like to note, however, that in years when Good Friday occurs in March, as it did this year, the average sequential change in LTL tons per day for March to April is a 2.6% increase. For July, we expect our revenue per day will increase by approximately 4 to 4.5% when compared to July of 2023, assuming the remaining days of the month follow normal historical trends. The growth rate in our revenue per day through the first half of July was relatively consistent with the second quarter. The comparisons have now become a little more difficult, however, as the final week of July last year was when we began to see freight diversion from a large competitor that ultimately followed for bankruptcy.

Speaker Change: I would like to note, however, that in years when Good Friday occurs in March, as it did this year, the average sequential change in LTL tons per day from March to April is a 2.6% increase.

Adam N. Satterfield: For July, we expect our revenue per day to increase by approximately 4 to 4.5% when compared to July of 2023, assuming the remaining days of the month follow normal historical trends. The growth rate of our revenue per day through the first half of July was relatively consistent with the second quarter. The comparisons have now become a little more difficult, however, as the final week of July last year was when we began to see freight diversion from a large competitor that ultimately filed for bankruptcy. We will provide the actual revenue-related details for July in our second quarter Form 10-Q.

Speaker Change: For July , we expect our revenue per day will increase by approximately 4 to 4.5% when compared to July of 2023, assuming the remaining days of the month follow normal historical trends.

Speaker Change: The growth rate in our revenue per day through the first half of July was relatively consistent with the second quarter. The comparisons have now become a little more difficult, however, as the final week of July last year was when we began to see freight diversion from a large competitor that ultimately filed for bankruptcy.

Adam Satterfield: We will provide the actual revenue-related details for July and our second quarter formed 10Q. Our operating ratio improved 40 basis points to 71.9% for the second quarter of 2024 due primarily to the quality of our revenue growth and continued focus on operating efficiencies. Our team continued to do a great job of managing our direct variable costs during the second quarter, which allowed us to improve these costs as a percent of revenue. Our overhead cost, however, continued to increase as a percent of revenue, despite our best efforts to minimize discretionary spending.

Speaker Change: We will provide the actual revenue-related details for July in our second quarter Form 10-Q .

Adam N. Satterfield: Our operating ratio improved 40 basis points to 71.9% for the second quarter of 2024, due primarily to the quality of our revenue growth and continued focus on operating efficiency. Our team continued to do a great job of managing our direct variable costs during the second quarter, which allowed us to improve these costs as a percent of revenue. Our overhead costs, however, continue to increase as a percent of revenue despite our best efforts to minimize discretionary spending.

Speaker Change: Our operating ratio improved 40 basis points to 71.9% for the second quarter 2024 due primarily to the quality of our revenue growth and continued focus on operating efficiencies.

Speaker Change: Our team continued to do a great job of managing our direct variable costs during the second quarter, which allowed us to improve these costs as a percent of revenue.

Speaker Change: Our overhead costs, however, continue to increase as a percent of revenue, despite our best efforts to minimize discretionary spending.

Adam Satterfield: As we have often said before, the two main ingredients to long-term operating and operational improvement are the combination of density and yield, both of which generally require a favorable macroeconomic environment. While we continue to execute on our yield management initiatives, it will likely take an improvement in the domestic economy before we see sustained momentum in shipping demand that generally leads to incremental market share opportunities and operating density. We remain confident that once we have both of these elements working again in our favor, our team can produce further improvement in our operating ratio and make progress towards our goal of achieving a sub-70 annual OR.

Adam N. Satterfield: As we have often said before, the two main ingredients to long-term operational improvement are the combination of density and yield, both of which generally require a favorable macroeconomic environment. While we continue to execute on our yield management initiatives. It will likely take an improvement in the domestic economy before we see sustained momentum in shipping demand that generally leads to incremental market share opportunities and operating density. We remain confident that once we have both of these elements working again in our favor, our team can produce further improvement in our operating ratio and make progress toward our goal of achieving a sub-70 annual OR. Old Dominion's cash flow from operations totaled $387.8 million and $811.7 million for the second quarter and first half of 2024, respectively, while capital expenditures were $238.1 million and $357.6 million for those same periods.

Speaker Change: As we have often said before, the two main ingredients to long-term operating ratio improvement are the combination of density and yield, both of which generally require a favorable macroeconomic environment.

Speaker Change: While we continue to execute on our yield management initiatives, it will likely take an improvement in the domestic economy before we see sustained momentum in shipping demand that generally leads to incremental market share opportunities and operating density.

Speaker Change: We remain confident that once we have both of these elements working again in our favor, our team can produce further improvement in our operating ratio and make progress towards our goal of achieving a sub-70 annual O.R.

Adam Satterfield: Olding means cash flow from operations total $387.8 million and $811.7 million for the second quarter and first half of 2024, respectively. While capital expenditures were $238.1 million and $357.6 million for those same periods. We utilized $551.8 million and $637.1 million of cash for our share repurchase program during the second quarter and first half of 2024, respectively, while cash dividends totaled $56.0 million and $126 million for the same periods. This year-to-date total for share repurchases includes $40 million that is deferred until the final settlement occurs on our current accelerated share repurchase agreement, which would be no later than November of 2024.

Speaker Change: Old Dominion's cash flow from operations totaled $387.8 million and $811.7 million for the second quarter and first half of 2024, respectively.

Speaker Change: While capital expenditures were $238.1 million and $357.6 million for those same periods.

Adam N. Satterfield: We utilized $551.8 million and $637.1 million of cash for our share repurchase program during the second quarter and first half of 2024, respectively, while cash dividends totaled $56.0 million and $112.6 million for the same period. This year-to-date total for share repurchases includes $40 million that is deferred until the final settlement occurs on our current Accelerated Share Repurchase Agreement, which would be no later than November 2024. Our effective tax rate for the second quarter of 2024 was 24.5%, which was lower than originally expected due to the benefit of certain discrete tax items. The effective tax rate for the second quarter of 2023 was $25.4%.

Speaker Change: We utilized $551.8 million and $637.1 million of cash for our share repurchase program during the second quarter and first half of 2024, respectively.

Speaker Change: While cash dividends totaled $56.0 million and $112.6 million for the same periods.

Speaker Change: This year-to-date total for share repurchases includes $40 million that is deferred until the final settlement occurs on our current Accelerated Share Repurchase Agreement, which would be no later than November of 2024.

Adam Satterfield: Our effective tax rate for the second quarter of 2024 was 24.5%, which was lower than originally expected due to the benefit of certain discrete tax items. The effective tax rate for the second quarter of 2023 was 25.4%. We currently anticipate our effective tax rate to be 25.0% for the third quarter.

Speaker Change: Our effective tax rate for the second quarter of 2024 was 24.5%, which was lower than originally expected due to the benefit of certain discrete tax items.

Speaker Change: The effective tax rate for the second quarter of 2023 was 25.4%.

Speaker Change: We currently anticipate our effective tax rate to be 25.0% for the third quarter.

Adam Satterfield: This concludes our prepared remarks this morning.

Operator: We currently anticipate our effective tax rate to be 25.0% for the third quarter. This concludes our prepared remarks this morning. Operator, we'll be happy to open the floor for questions at this time. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.

Operator: Operator will be happy to open floor for questions at this time. We will now begin the question or answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Please limit yourself to one question. If you have additional questions, you may re-enter the question queue.

Speaker Change: This concludes our prepared remarks this morning. Operator, we'll be happy to open the floor for questions at this time.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question, you may press star then 1 on your telephone keypad.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question, please press star then 2.

Speaker Change: Please limit yourselves to one question. If you have additional questions, you may re-enter the question queue.

Jordan Alliger: Our first question today is from Jordan Alliger with Goldman Sachs. Please go ahead.

Operator: To withdraw your question, please press star then 2. Please limit yourselves to one question. If you have additional questions, you may re-enter the question queue. Our first question today is from Jordan Alliger with Goldman Sachs. Please go ahead. Yeah, hi, morning.

Speaker Change: Our first question today is from Jordan Alliger with Goldman Sachs. Please go ahead.

Jordan Alliger: Hi, Morning. Thanks for the update.

Jordan Robert Alliger: Thanks for the update. Hey, I wonder, as you often do, is it possible to get some sense for, you know, given the context of revenue per day and what you're seeing in the economy, how things could look seasonally, TQ to 3Q in terms of the operating ratio? Thanks.

Jordan Alliger: Hey, I wonder, as you often do, is it possible to get some sense for, given the context of revenue per day and what you're seeing in the economy, how things could look seasonally, TQ to 3Q in terms of the operating ratio. Thanks.

Jordan Robert Alliger: Yeah, hi, morning. Thanks for the update. Hey, I wonder, as you often do, is it possible to get some sense for, you know, given the context of revenue per day and what you're seeing in the economy, how things could look seasonally, TQ to 3Q in terms of the operating ratio? Thanks.

Adam Satterfield: Yes, sure. Unfortunately, we're still dealing with an economy that's not contributing too much to us right now, with 55 to 60% of our revenue being industrially related. The ISM continues to be below 50, and I think that's 19 of the past 20 months.

Adam N. Satterfield: Yeah, sure. Unfortunately, you know, we're still dealing with an economy that's not contributing too much to us right now, with 55 to 60% of our revenue being industry related. The ISM continues to be below 50.

Speaker Change: Yes, sure. Unfortunately, you know, we're still dealing with an economy that's not contributing too much to us right now with 55 to 60% of our revenue being industry related.

Speaker Change: The ISM continues to be below 50, and I think that's...

Adam Satterfield: It's hard to say what will happen from a top line basis. As you know, the revenue will dictate a lot of the performance, at least when we go sequentially. But, you know, I feel like some things have been some bright spots to look at in terms of the trend that we saw through June and so far this month in July from a revenue and a volume standpoint.

Speaker Change: 19 out of the past 20 months, so...

Speaker Change: It's hard to say what will happen from a top line basis, and as you know, the revenue will dictate a lot of the performance, at least when we go sequentially.

Adam N. Satterfield: And I think that's 19 out of the past 20 months. So, you know, it's hard to say what will happen from a top-line basis. And, as you know, revenue will dictate a lot of the performance, at least when we go sequentially. But, you know, I feel like some things, there have been some bright spots to look at in terms of the trend that we saw through June and so far this month in July from a revenue and a volume standpoint.

Speaker Change: I feel like some things, there have been some bright spots to look at in terms of the trend that we saw through June and so far this month in July from a revenue and a volume standpoint.

Adam N. Satterfield: So, you know, we'll see how that continues to play out as we progress through the quarter. And, as we always do, we will give our mid-quarter update with the August performance once that is finished. Based on kind of where we are today, normal seasonality is typically about a 50 basis point increase sequentially from the second to the third quarter, and I think that's achievable. It's certainly what the goal would be, and I think that regardless of which way the revenue goes, if we stay kind of flattish, like we've seen from a quarter-to-quarter standpoint, typically, the average sequential change in revenue is about a 3.5% We generally give ourselves kind of plus or minus 20 basis points, but I think that's something that's certainly very achievable for the third quarter.

Adam Satterfield: We'll see how that continues to play out as we progress through the quarter, and as we always do, we will give our mid-quarter update with the August performance once that is finished. But, you know, based on kind of where we are today, normal seasonality is typically about a 50 basis point increase sequentially from the second to the third quarter. And I think that's achievable. It's certainly what the goal would be. And I think that, you know, regardless of which way the revenue goes, if we stay kind of flatish, like we've seen from a quarter-to-quarter standpoint.

Speaker Change: We'll see how that continues to play out as we progress through the quarter. As we always do, we will give our mid-quarter update with the August performance once that is finished.

Speaker Change: Yeah, based on kind of where we are today, normal seasonality is typically about a 50 basis point increase sequentially from the second to the third quarter.

Speaker Change: And I think that's achievable. It's certainly what the goal would be.

Speaker Change: I think that regardless of which way the revenue goes, if we stay kind of flat-ish, like we've seen from a quarter-to-quarter standpoint, typically the average sequential change in revenue is about a 3.5% increase.

Adam Satterfield: Typically, the average sequential change in revenue is about a 3.5% increase from the second to the third quarter. So, you know, where we follow along that spectrum from the top line basis, I still think that, you know, something along the lines of that 50 basis point sequentially increase plus or minus, of course, we generally give ourselves, you know, kind of plus or minus 20 basis points. But I think that's something that's certainly very achievable for the third quarter.

Speaker Change: from the second to the third quarter. So, you know, wherever we fall on that spectrum from a top-line basis, I still think that.

Speaker Change: You know, something along the lines of that 50 basis point sequential increase. Plus or minus, of course, we generally give ourselves, you know, kind of plus or minus 20 basis points. But I think that's something that's certainly very achievable for the third quarter.

Adam N. Satterfield: And just as a quick follow-up, if I could, just on demand, you mentioned the Sub 50 ISM and New Orders Index as well. I mean, as you sort of look ahead and talk to customers, do you feel that there could finally be some change in that as we move through the year, or is it still tough to tell? Well, I think it's still tough to tell.

Jordan Alliger: And just as a quick follow-up, if I could, just on the demand, you mentioned the sub-50 ISM and New Order's index as well.

Speaker Change: And just as a quick follow-up, if I could, just on the demand, you mentioned the sub...

Adam Satterfield: I mean, as you sort of look ahead and talk to customers, I mean, do you feel that there could be finally some change in that as we move through the years? It's tough to tell still. Well, I think it's still tough to tell. I mean, I feel like things are starting to fall a little bit. You know, again, I felt like we had a good performance through June. You know, we finally had some good sequential increase there from a volume standpoint. And so, a little bit of acceleration and somewhat similar to what we had in the final month of the first quarter with marks there.

Speaker Change: 50 ISM

Speaker Change: New Orders Index as well. I mean, as you sort of look ahead and talk to customers, I mean, do you feel that there could be finally some change in that as we move through the year, or is it tough to tell still?

Adam N. Satterfield: I mean, I feel like things are starting to thaw a little bit. You know, again, I felt like we had a good performance through June. You know, we finally had some good sequential increases there from a volume standpoint, and so a little bit of acceleration and somewhat similar to what we had in the final month of the first quarter with March there. But, you know, a nice increase from the May to June period. So, you know, it's something that we'll continue to watch.

Speaker Change: Well, I think it's still tough to tell. I mean, I feel like things are starting to thaw a little bit. You know, again, I felt like we had a good performance through June .

Speaker Change: We finally had some good sequential.

Speaker Change: Increase there from a volume standpoint.

Speaker Change: and so a little bit of acceleration and somewhat similar to what we had in the final month of the first quarter with March there.

Adam Satterfield: But, you know, a nice increase from the May to June period. So, you know, something that will continue to watch, you know, we've got the third quarter here. And then we typically go through the seasonally slower fourth quarter and first quarter. But, you know, hopefully some things are building. I think when you look at some of the macroeconomic factors, would suggest that, you know, maybe some of the things that the Fed would watch would indicate that we may be closer to. You know, the interest rate environment may be improving a little bit and seeing some cuts out there that would certainly help from this standpoint.

Speaker Change: but you know, a nice increase from the May to June period. So, you know, something that we'll continue to watch. You know, we've got the third quarter here and then we typically go through the seasonally slower.

Adam N. Satterfield: You know, we've got the third quarter here, and then we typically go through the seasonally slower fourth quarter and first quarter. But, you know, hopefully, some things are building. I think when you look at some of the macroeconomic factors, they suggest that, you know, maybe some of the things that the Fed would watch would indicate that we may be closer to, you know, the interest rate environment maybe improving a little bit and seeing some cuts out there that would certainly help from a business standpoint.

Speaker Change: [inaudible]

Speaker Change: Maybe some of the things that the Fed would watch would indicate that we may be closer to, you know, the interest rate environment, maybe improving a little bit and seeing some cuts out there that would certainly help from a business standpoint.

Jordan Alliger: So, you know, it seems like we're coming close to the end of a long, slow cycle. And we'll just have to continue to watch and see what's presented to us. But, you know, certainly feels like we're seeing a little bit more opportunity out there than what we have in the scene.

Adam N. Satterfield: So, you know, it seems like we're coming close to the end of a long, slow cycle, and we'll just have to continue to watch and see what's presented to us. But, you know, it certainly feels like we're seeing a little bit more opportunity out there than we have been seeing. Thank you so much.

Speaker Change: It seems like we're coming close to the end of a long, slow cycle, and we'll just have to continue to watch and see what's presented to us. But it certainly feels like we're seeing a little bit more opportunity out there than what we have been seeing.

Jordan Alliger: Thank you so much.

Daniel Imbro: The next question is from Daniel Imbro with Steven Zink. Please go ahead.

Daniel Imbro: The next question is from Daniel Imbro with Stevens Inc. Please go ahead. Yeah, good morning, guys. Thanks for taking our questions. Maybe one, Adam, I want to ask one on the pricing side.

Speaker Change: Thank you so much.

Speaker Change: The next question is from Daniel Imbro with Stevens Inc. Please go ahead.

Daniel Imbro: Good morning, guys. I second our questions. Maybe Adam wanted to ask one on the pricing side. I think the mid-quarter update suggested pricing was stable. June actually seemed to improve a bit. I guess how is pricing continuing to July? Are we seeing any changes? In stepping back from industry standpoint, demand remains tepid, to your point.

Adam N. Satterfield: I think the mid-quarter update suggested pricing was stable, and June actually seemed to improve a bit. I guess how is pricing continuing to July? Are we seeing any changes in stepping back from an industry standpoint? Demand remains tepid, to your point? Can the industry support further GRIs and other rate increases in the back half of this year as comparisons get more difficult? Thanks.

Daniel Imbro: Yeah, good morning, guys. Thanks for taking our questions.

Daniel Imbro: Adam, I wanted to ask one on the pricing side. I think the mid-quarter update suggested pricing was stable. June actually seemed to improve a bit. I guess, how is pricing continuing into July ? Are we seeing any changes? And stepping back just from an industry standpoint, demand remains tepid, to your point. Can the industry support

Adam Satterfield: Can the industry support further GRIs and other rate increases in the back half of this year as comparisons get more difficult. Thanks.

Speaker Change: Further GRIs and other rate increases in the back half of this year as comparisons get more difficult. Thanks.

Adam Satterfield: Yeah, I think what we've seen is just a continuation of executing on our long-term yield management philosophy. We continue to target increases that all set our cost inflation and support the continued investment in capacity and technologies that our customers expect from us. And our yield trend in June and what we're seeing thus far in July is pretty similar.

Adam N. Satterfield: Yeah, I think what we've seen is just a continuation of executing on our long-term yield management philosophy. And, you know, we continue to target increases that offset our cost inflation and support the continued investment in capacity and technologies that our customers expect from us. And our yield trend in June and what we're seeing thus far in July are pretty similar.

Speaker Change: Yeah, I think what we've seen is just a continuation of executing on our long-term yield management philosophy.

Speaker Change: We continue to target increases that offset our cost of inflation and support the continued investment.

Speaker Change: Incapacity, and technologies that our customers expect from us.

Speaker Change: Our yield trend in June and what we're seeing thus far in July is pretty similar from a year-over-year standpoint.

Adam N. Satterfield: From a year-over-year standpoint, if you just sort of look at normal seasonality and revenue per hundredweight, at least excluding fuel, normal sequential would imply that for the full quarter, it would be up 4 to 4.5 percent, that metric. And some of that will be some mixed change that we'll go through more so in August and September. If you think last year following the disruption to the industry, our weight per shipment decreased quite a bit as we moved through August and September last year. Overall, for the third quarter of 23, it was down about 30 pounds versus the second quarter of 23.

Adam Satterfield: From a year-over-year standpoint, if you just sort of look at normal seasonality and revenue per hundred weight, at least excluding fuel, normal sequential would imply that for the full quarter it'd be up four to four and a half percent. That metric and some of that will be some mixed change that will go through in more so in August and September. If you think last year, following the disruption to the industry, our wait for shipment decreased quite a bit as we move through August and September last year, overall for the third quarter of 23. It was down about 30 pounds versus the second quarter of 23.

Speaker Change: If you just sort of look at normal seasonality and revenue per hundredweight, at least excluding fuel, normal sequential would imply that for the full quarter it would be up four to four and a half percent.

Speaker Change: that metric

Speaker Change: Some of that will be some mixed change that we'll go through more so in August and September .

Speaker Change: If you think last year, following the disruption to the industry, our wait for shipment decreased quite a bit.

Speaker Change: as we moved through August and September last year, overall for the third quarter of 23.

Adam N. Satterfield: So we had that reduction in weight per shipment, and I would like to see at least our weight per shipment has been stable. If that continues to increase further, you know, in a reflection, if there is any improvement in the economy, then that just becomes more challenging from a mixed standpoint. But so far, what we've seen in July is pretty consistent with where we were in the second quarter of June, in particular. So we'll continue to see how that plays out. Thanks so much.

Adam Satterfield: So had that reduction in wait for shipment, and I would like to see that at least our wait for shipment has been stable. If that continues to increase further in reflection, if there is any improvement in the economy, then that just becomes more challenging from a mixed standpoint. But so far, what we've seen in July is pretty consistent with where we were in the second quarter in June, in particular. So we'll continue to see how that plays out.

Speaker Change: It was down about 30 pounds versus the second quarter of 23.

Speaker Change: I would like to see that at least our weight per shipment has been stable.

Speaker Change: If that continues to increase further, you know, in a reflection, if there is...

Speaker Change: Any Improvement in the Economy, then that just becomes more challenging from a mixed standpoint. But so far, what we've seen in July is pretty consistent with where we were in the second quarter, in June in particular, so we'll continue to see how that plays out.

Unknown Executive: Bethel Lucas.

Chris Weatherby: The next question is from Chris Weatherby with Wells Fargo.

Christian F. Wetherbee: Best of luck, guys. The next question is from Chris Wetherbee with Wells Fargo. Please go ahead. Yeah, hey, thanks. Good morning.

Speaker Change: Thanks so much. Best of luck, guys.

Chris Weatherby: Please go ahead. Yeah, hey, thanks. Good morning.

Speaker Change: The next question is from Chris Wetherbee with Wells Fargo. Please go ahead.

Adam N. Satterfield: Maybe, Adam, if you could talk a little bit about weight per shipment trends. It's pretty flattish the last couple of quarters, and certainly sequentially from 1Q to 2Q. Just kind of your general thoughts on how you see that playing out.

Adam Satterfield: Maybe Adam, you can talk a little bit about wait for shipment trends. It's pretty flatish the last couple of quarters and certainly sequentially from one Q to two Q. Just kind of your general thoughts on how you see that playing out. Obviously, that could be part of just a sluggish economy as we're moving forward here, but you're going to get a sense of maybe what you're seeing in July if there's any change in that. Yeah, no real change in the why in July; still kind of continuing to bounce around that 1500 pounds mark, and you know, to me, I think that's what we've seen.

Speaker Change: Hey, thanks for the warning.

Christian F. Wetherbee: Maybe, Adam, if you could talk a little bit about weight per shipment trends. It's pretty flat-ish the last couple of quarters and certainly sequentially from 1Q to 2Q. Just kind of your general thoughts on how you see that playing out. Obviously, that could be part of just a sluggish economy as we're moving forward here, but you're going to get a sense of maybe what you're seeing in July , if there's any change in that.

Adam N. Satterfield: Obviously, that could be part of just a sluggish economy as we're moving forward here, but you're going to get a sense of maybe what you're seeing in July, if there's any change in that. Yeah, no real change in July. It's still kind of continuing to bounce around that 1,500 pounds mark, and, you know, to me, I think that's what we've seen. You know, obviously, we saw the unique change that happened last year right at the end of July going into August, and, you know, that took our weight down quite a bit, as I just mentioned.

Adam N. Satterfield: Yeah, no real change in July , still kind of continuing to bounce around that 1,500.

Speaker Change: Pound, Mark, and...

Adam Satterfield: Yeah, obviously we saw the unique change that happened last year right at the end of July going into August, and you know that that took our weight down, you know, quite a bit like I just mentioned. But it just feels like we've been bouncing along the bottom, and I think that an indicator really where the industrial economy has been as well. So I think that should be one of the first signs and early indicators if we start seeing some some incremental weight on each shipment that we're picking up. That orders might be picking up and you know that would obviously be good for a lot of measurements.

Speaker Change: To me, I think that's what we've seen, obviously we saw the unique change that happened last year right at the end of July going into August and that took our weight down quite a bit like I just mentioned.

Adam N. Satterfield: But it just feels like we've been bouncing along the bottom, and I think that's an indicator of where the industrial economy has been as well. So I think that should be one of the first signs and early indicators if we start seeing some incremental weight on each shipment that we pick up that orders might be picking up, and, you know, that would obviously be good for a lot of measurements. If we can get more weight per shipment, you know, generally that's going to lead to improvement in operating efficiencies, and, you know, that generally leads to improved volumes in general if the underlying economy truly is improving.

Speaker Change: But it just feels like we've been bouncing along the bottom, and I think that's...

Speaker Change: An indicator really where the industrial economy has been as well.

Speaker Change: So I think that should be one of the first signs and early indicators if we start seeing some incremental weight on each shipment that we're picking up, that orders might be picking up and that would obviously

Adam Satterfield: We can get more weight for shipment, you know, generally that's going to lead to the improvement and operate efficiencies and you know, generally that leads into improved volumes and general method of underlying economy truly is improving. So you know, all things that we are very prepared for in terms of the capacity and our service center network, the capacity of our people in our fleet.

Speaker Change: Be good for a lot of measurements. We can get more weight per shipment. Generally, that's going to lead to improvement in operating efficiencies.

Speaker Change: Generally that leads into improved volumes in general, if the underlying economy truly is.

Adam N. Satterfield: So, you know, all things that we are very prepared for in terms of the capacity in our service center network, the capacity of our people, and our fleet. We are primed and in position to respond whenever the market does, in fact, inflect positively.

Speaker Change: Improving. So, you know, all things that we are very prepared for in terms of the capacity in our service center network, the capacity of our people and our fleet, we are primed and in position to respond whenever the market does, in fact, inflect to the positive.

Adam Satterfield: We are primed in imposition to respond whenever the market does in fact and select to the public.

Scott Group: The next question is from Scott Group with Wolf Research. Please go ahead.

Scott H. Group: Thank you. The next question is from Scott Group with Wolf Research. Please go ahead.

Speaker Change: Got it. Thank you.

Speaker Change: The next question is from Scott Group with Wolf Research. Please go ahead.

Scott Group: Hey, thanks, Adam. Just a couple of follow-ups if I can first.

Scott H. Group: Hey, thanks, Adam, just a couple of follow-ups, if I can, first, the four to four and a half percent revenue, any sense of breaking that down between tonnage and then yield. And then I just want to make sure I'm understanding your OR commentary about the 50 basis points worse, which is normal. Are you saying even if we don't get the full typical three and a half percent sequential revenue increase, we can still stay with the normal OR degradation, and it's not worse? Is that the message that you're giving?

Scott H. Group: Hey, thanks. Adam, just a couple of follow-ups, if I can, first. The 4% to 4.5% revenue, any sense of breaking that down between tonnage and then yield? And then I just want to make sure I'm understanding your OR commentary about the

Adam Satterfield: The four to four and a half percent revenue, any sense of breaking that down between tonnage and then yield. And then I just want to make sure I'm understanding you're a lot of commentary about the 50 basis points worse, which is normal. Are you saying even if we don't get the full typical three and a half percent sequential revenue increase, we can still stay with the normal OR degradation and it's not worse? Is that the message that you're giving?

Speaker Change: 50 Basis Points Worse, which is normal. Are you saying even if we don't get the full, typical three and a half percent sequential revenue increase, we can still...

Speaker Change: stay with the normal OR degradation and it's not worse. Is that the message that you're giving?

Adam Satterfield: Yeah, I think to think into that question first. Yeah, I think that we're going to go with the 50 basis points being in the target. And again, keep in mind, just like we said last quarter, put a plus or minus around that, not being that specific; anything can happen. I think that our team is continuing to do a great job with managing costs in this lower volume environment. And we will continue to do so as we progress through the third quarter. And so obviously it's a little bit easier if we've got some revenue contribution. We typically have an increase in certain cost elements as we progress through the quarter.

Adam N. Satterfield: Yeah, I think to answer that question first, yeah, I think that we're gonna go with the 50 basis points being the target. And again, keep in mind, just like we said last quarter, it's, you know, put a plus or minus around that, not being that specific; anything can happen. But, you know, I think that our team is continuing to do a great job with managing costs in this lower volume environment, and we will continue to do so as we progress through the third quarter.

Speaker Change: Yeah, I think to answer that question first, yeah, I think that we're going to go with the 50 basis points being the target, and again, keep in mind, just like we said last quarter, it's...

Speaker Change: You know, put a plus or minus around that, not being that specific, anything can happen, but...

Speaker Change: You know, I think that our team is continuing to do a great job with managing costs in this lower volume environment, and we will continue to do so as we progress through the third quarter.

Adam N. Satterfield: And so obviously, it's a little bit easier if we've got some revenue contribution. We typically have an increase in certain cost elements as we progress through the quarter. But we will continue to execute on our CapEx plan. So we will have incremental depreciation dollars in the third quarter versus the second. And we have a wage increase that will go out the first of September as well, as it always does. So you get one month of that.

Speaker Change: And so, obviously, it's a little bit easier if we've got some revenue contribution. We typically have an increase in certain cost elements as we progress through the quarter. We're continuing to execute on our CapEx plan, so we will have incremental depreciation dollars.

Adam Satterfield: We'll continue to execute on our CAPEX plan, so we will have incremental depreciation dollars in the third quarter versus the second. We have a wage increase that will go out the first of September, as well as it always does. So you get one month of that. And so we'll continue to monitor and measure operating efficiencies. And we've been seeing some improvements there and have some other offsets as well. Continue to manage every discretionary dollar that's going out the door and managing to the business levels that we're seeing. And so we'll continue to do all those things, but certainly hope that we'll see a little bit of incremental revenue improvement.

Speaker Change: in the third quarter versus the second.

Speaker Change: We have a wage increase that will go out the 1st of September as well, as it always does, so you get one month of that.

Adam N. Satterfield: And so, but we'll continue to monitor and measure operating efficiencies. And we've been seeing some improvements there, and you know, and have some other offsets as well. Continue to manage every discretionary dollar that's going out the door in managing to the business levels that we're seeing. So we'll continue to do all those things but certainly hope that we'll see a little bit of incremental revenue improvement, and that will make things easier, obviously.

Speaker Change: and so we'll continue to...

Speaker Change: Monitor and Measure Operating Efficiencies, and we've been seeing some improvements there, and have some other offsets as well. Continue to manage every discretionary dollar that's going out the door in managing to the business levels that we're seeing. So we'll continue to do all those things, but certainly hope that we'll see

Adam Satterfield: And that will make things easier, obviously, but we're going to continue to manage and have that hanging out there as our goal to achieve.

Speaker Change: A little bit of incremental revenue improvement, and that will make things easier, obviously, but, you know, we're going to continue to manage and have that hanging out there is our goal to achieve.

Adam N. Satterfield: But, you know, we're gonna continue to manage and have that hanging out there as our goal to achieve. And then any other quick thoughts, record buyback in the quarter? Is this a change in sort of capital returns?

Adam Satterfield: And then any just quick thoughts, record buyback in the quarter.

Speaker Change: And then, any just quick thoughts, record buyback in the quarter? Is this a change in sort of capital returns? Is this a new sort of run rate to think about going forward?

Adam Satterfield: Is this a change in sort of capital returns? Is this a new sort of run rate to think about going forward?

Adam N. Satterfield: Is this a new sort of run rate to think about going forward? No, it's no change. I think it's similar.

Adam Satterfield: No, it's no change. I think it's similar. It was a record level, as you say, but you go back a couple of years ago. And when our stock performed similar to the big drop that we saw during the second quarter, to give out 2022, we spent $1.3 billion in total that year. So it had some pretty hefty quarters. It was just spread more through the year, but our stock was off 20, 25% from 52-week highs, going back to the last quarter stone call and earnings call. And so, you know, as we've done in the past, we stepped in and were more aggressive with our repurchases.

Adam N. Satterfield: It was a record level, as you say, but if you go back a couple of years ago, and when our stock performed similar to the big drop that we saw during the second quarter, to get back to 2022, we spent $1.3 billion in total that year. So it had some pretty hefty quarters. It was just spread more through the year, but our stock was off 20%, 25% from its 52-week highs going back to the last quarter's phone call and earnings call.

Speaker Change: No, it's no change. I think it's it's similar. It was a record level, as you say, but, you know, you go back a couple of years ago, and when our stock performed, similar to the big drop that we saw

Speaker Change: During the second quarter, get back to 2022, we spent...

Speaker Change: $1.3 billion in total that year. So had some pretty hefty quarters. It was just spread

Speaker Change: more through the year. But our stock was was off 20-25% from

Speaker Change: from 52 Week High is going back to the last quarter's phone call and earnings call. And so, you know, as we've done in the past, we stepped in and we're more aggressive with our repurchases.

Adam Satterfield: And, you know, the stock crisis has recovered a bit. And so, you know, be going back more so to kind of our normalize grid-based approach to repurchase and shares. But, you know, we just stepped in a little bit more aggressively with the cash that we had on the balance sheet and purchased more during the second quarter, including an accelerated share repurchase agreement as well.

Speaker Change: [inaudible]

Adam N. Satterfield: But we just stepped in a little bit more aggressively with the cash that we had on the balance sheet and purchased more during that second quarter, including an accelerated share repurchase agreement as well, which we still have a little bit of about $40 million that was deferred on that agreement that should settle sometime late in the third quarter or early in the fourth quarter. Thank you, guys. I appreciate the time. The next question is from Ravi Shanker with Morgan Stanley. Please go ahead.

Speaker Change: [inaudible]

Adam Satterfield: And which we still have got a little bit of about $40 million that was deferred on that agreement that should settle, you know, sometime late third quarter early in the fourth quarter.

Speaker Change: Share repurchase agreement as well and which we still have got a little bit of about 40 million dollars That was deferred on that agreement that should settle You know sometime late third quarter early in the fourth quarter

Scott Group: Thank you guys. Appreciate the time.

Ravi Shanker: The next question is from Ravi Shanker with Morgan Stanley. Please go ahead.

Speaker Change: Thank you, guys. Appreciate the time.

Speaker Change: The next question is from Ravi Shanker with Morgan Stanley . Please go ahead.

Ravi Shanker: Thanks, everyone. This is probably the first upcycle in a while, maybe ever, where it's not just you who have the excess capacity, but a lot of your peers do, as well. I think you kind of alluded to that in your prepared remarks as well. Do you have a sense that their approach to having this excess capacity and dealing with the drag on incremental margins is similar to your own? Or do you feel that they may be kind of looking to deploy that capacity a little bit earlier than you guys? Yeah.

Ravi Shanker: Thanks, everyone. This is probably the first Upcycle in a while, maybe ever, where it's not just you who has the excess capacity, but a lot of your peers do as well. I think you kind of alluded to that on your prepared remarks as well. Do you have a sense that their approach to having this excess capacity and dealing with the drag on incremental margins is similar to your own? Or do you feel that they may be kind of looking to deploy that capacity a little bit earlier than you guys?

Morty Freeman: I can't answer for what they're going to do with any measure of any excess capacity any individual carrier has, but with respect to just looking at the industry broadly, I feel like that we're going to be a more capacity constrained industry. Then we work previously. If you go back, we estimate that shipping volumes are down about 15% from kind of the peak back in 2021, and when you look at the number of service centers that have settled from that bankruptcy proceeding, not all are in operation yet, but probably at least 10%, and maybe more capacity will be coming out of the market.

Adam N. Satterfield: You know, I can't answer for what they're going to do with any measure of any excess capacity any individual carrier has. But, you know, with respect to just looking at the industry broadly, I feel like we're going to be a more capacity-constrained industry than we were previously. If you go back, we estimate that shipping volumes are down about 15% from kind of the peak back in 2021. And when you look at the number of service centers that have settled from that bankruptcy proceeding, not all are in operation yet, but probably at least 10% and maybe more capacity will be coming out of the market.

Speaker Change: Yeah, it's...

Speaker Change: I can't answer for what they're going to do with any measure of any excess capacity any individual carrier has.

Speaker Change: With respect to just looking at the industry broadly, I feel like that we're going to be a more capacity-constrained industry than we were previously. If you go back...

Speaker Change: We estimate that shipping volumes are down about 15% from kind of the peak back in 2021.

Speaker Change: And when you look at the number of service centers that have settled.

Speaker Change: from that bankruptcy proceeding.

Speaker Change: Not all are in operation yet, but probably at least 10% and maybe more.

Morty Freeman: So, you know, all those shipments that were being picked up and delivered by that carrier, they are LTL shipments. They will come back to the market, and our market will recover to the levels where it was previously, and I believe will continue to increase further. So, that's why we continue to believe and continue to invest ahead of our anticipated growth curve. We don't see anything that has changed with the opportunities that we have for long-term market share opportunities, other than perhaps maybe they've gotten stronger. There's more shippers look for high-quality service carriers; the inventory management continues to be an operating focus, especially in a higher interest rate environment.

Adam N. Satterfield: So, you know, all those shipments that were being picked up and delivered by that carrier, they are LTL shipments, and they will come back into the market, and our market will recover to the levels where it was previously and, I believe, will continue to increase further. So that's why we continue to believe and continue to invest ahead of our anticipated growth curve. We don't see anything that has changed with the opportunities that we have for long-term market share opportunities other than perhaps perhaps they've gotten stronger.

Speaker Change: capacity will be coming out of the market. So, you know, all those shipments that were being picked up and delivered by that carrier, they are LTL shipments, they will come back to the market. And our market will recover to the levels where it was previously and I believe will continue to increase further.

Speaker Change: So that's why we continue to believe and continue to invest.

Speaker Change: Ahead of our anticipated growth curve, we don't see anything that has changed with the opportunities that we have for long-term market share opportunities.

Adam N. Satterfield: There are more shippers looking for high quality service carriers; inventory management continues to be an operating focus, especially in a higher interest rate environment. I think it puts the burden on shippers to select high quality carriers, and there's none better than Old Dominion.

Speaker Change: Other than perhaps maybe they've gotten stronger. There's more shippers look for high-quality service carriers. Inventory management continues to be an operating focus, especially in a higher interest rate environment. I think it puts the burden.

Morty Freeman: I think it puts the burden on shippers to select high-quality carriers, and there's none better than Old Dominions. So, we look at the market generally and believe we've got a strong opportunity that we've ever had, and we think we're better positioned than any other carrier to capitalize on and improve an industry.

Adam N. Satterfield: So we look at the market generally and believe we've got as strong an opportunity as we've ever had. And we think we're better positioned than any other carrier to capitalize on and improve in the industry. Okay. Thank you. The next question is from Tom Wadowitz with UBS. Please go ahead.

Speaker Change: on shippers to select high-quality carriers, and there's none better than Old Dominion. So we look at the market generally and believe we've got a strong opportunity that we've ever had, and we think we're better positioned than any other carrier to capitalize.

Ravi Shanker: Understood.

Speaker Change: I want to improve in industry.

Tom Wadowicz: The next question is from Tom Wadowicz with UBS. Please go ahead.

Speaker Change: Understood, thank you.

Speaker Change: The next question is from Tom Wadowitz with UBS. Please go ahead.

Tom Wadowicz: Yeah, good morning. So, Adam, I wanted to see if you could give us, if I missed this, but I think just like the July tonnage and shipments, I think you talked about revenue terms but not the tonnage and shipments. I don't know if you want to give us like, you know, normal fees now, like July versus June or year by year, but some kind of framework for thinking about shipments and tonnage in July. Yeah, the breakdown, if you will, of the revenue. It's definitely in flux. I mean, like I mentioned, you know, we were in the first part of this month.

Thomas Richard Wadewitz: Yeah, good morning. So, Adam, I wanted to see if you could give us I apologize if I missed this, but I think just like the July tonnage and shipments. I think you talked about revenue terms, but not tonnage and shipments. I don't know if you want to give us like, you know, normal seasonality, July versus June or year over year, but some kind of framework for thinking about shipments and tonnage in July.

Thomas Richard Wadewitz: Yeah, good morning. So, Adam, I wanted to see if you could give us, I apologize if I missed this, but

Thomas Richard Wadewitz: I think just like the July tonnage and shipments, I think you talked about revenue terms, but not the tonnage and shipments. I don't know if you want to give us like, you know, normal seasonality, July versus June or year over year, but some kind of framework for thinking about shipments and tonnage in July .

Thomas Richard Wadewitz: Yeah, the breakdown, if you will, of the revenue, it's definitely in flux. I mean, like I mentioned, we were in the first part of this month growing at a similar rate from a revenue per day standpoint where we were for the second quarter and kind of in that 6% range. And obviously, the comps have changed pretty considerably, mainly starting this week in particular.

Speaker Change: Yeah, the breakdown, if you will, of the revenue, it's definitely in flux. I mean, like I mentioned, you know, we were, in the first part of this month, we were growing at a similar rate.

Adam Satterfield: We were growing at a similar rate from a revenue per day standpoint, is where we were for the second quarter, and kind of that 6% range. And obviously, the cops have changed pretty considerably, mainly starting this week in particular. And so it's going to cause a little disruption to, you know, what the tonnage numbers look like what we're seeing today. You know, we can extrapolate out, and we do, where we think we'll finish, but I think there's going to be a little flux with respect to what those final volume numbers and yield numbers might look like, given the drastic change in business levels and mix that we saw in that last part of the month of July.

Speaker Change: From a revenue per day standpoint, this is...

Speaker Change: where we were for the second quarter and kind of that that 6% range and obviously the cops have changed.

Adam N. Satterfield: And so it's going to cause a little disruption to, you know, what the tonnage numbers look like, what we're seeing today, you know, we can extrapolate out, and we do where we think we'll finish. But I think there's going to be a little flux with respect to what those final volume numbers and yield numbers might look like, given the drastic change in business levels and mix that we saw in the last part of the month of July.

Speaker Change: Pretty considerably, mainly starting this week in particular. And so it's going to cause a little disruption to...

Speaker Change: what the tonnage numbers look, what we're seeing today. You know, we can extrapolate out, and we do, where we think we'll finish, but I think there's gonna be a little flux with respect to what those final.

Speaker Change: Volume Numbers and Yield Numbers might look like given the drastic change in business levels and mix that we saw.

Adam Satterfield: But, you know, at this point, I would say that that four to four and a half percent, you know, I would say that the volumes are probably about flatish and that could be plus or minus one way around that and that flatness. And then from a yield standpoint, again, pretty consistent with what we just saw in the second quarter. And, you know, right now it's looking a little bit stronger, but, you know, we'll see where those final numbers land. And, you know, of course, we'll put the final details out there, but just from a pure revenue standpoint and just looking at revenue per day, you know, July and October are the months that we see decreases.

Speaker Change: in that last part of the month of July . But, you know, at this point, I would say that that 4 to 4.5% Yeah, I would say that this

Adam N. Satterfield: But, you know, at this point, I would say that that four to four and a half percent, you know, I would say that the volumes are probably about flattish, and that could be plus or minus, you know, one way around that and that flatness.

Speaker Change: The volumes are probably about flat-ish and that could be plus or minus, you know, one way.

Adam N. Satterfield: And then from a yield standpoint, again, pretty consistent with what we just saw in the second quarter. And, you know, right now, it's looking a little bit stronger. But, you know, we'll see where those final numbers land. And, you know, of course, we'll put the final details out there.

Speaker Change: around that and

Speaker Change: That flatness and then from a yield standpoint.

Speaker Change: Again, pretty consistent with what we just saw in the second quarter and right now it's looking a little bit stronger, but we'll see where those final numbers land and of course we'll put the final.

Adam N. Satterfield: But just from a pure revenue standpoint, though, and just looking at revenue per day, you know, July and October are the months that we see decreases. And as we go month to month, we progress through the year. And what we're seeing from a pure revenue per day standpoint is pretty consistent with what normal seasonality would otherwise be, which is a drop off somewhere in kind of the two and a half percent type of range.

Kevin M. Freeman: details out there. But just from a pure revenue standpoint, though, and just looking at revenue per day, you know, July and October are the months that we see decreases, and as we go month to month, progress through the year.

Adam Satterfield: And, as we go month to month, progress through the year and what we're seeing from a pure revenue standpoint is it's pretty consistent with what normal seasonality would otherwise be, you know, which is a drop off somewhere and kind of a two and a half percent type of range. And, that's pretty consistent with what our five-year average has been there. So, you know, we'll look to see that we get some recovery. You know, back in August, which is normal. And then September, as you know, is pretty much our strongest month of the year. So can we see, you know, stronger acceleration going into the end of the quarter.

Kevin M. Freeman: And what we're seeing from a pure revenue today standpoint is it's pretty consistent with what normal seasonality would otherwise be, you know, which is a drop off somewhere in kind of the two and a half percent.

Kevin M. Freeman: type of range. And that's pretty consistent with what our five-year average

Adam N. Satterfield: And that's pretty consistent with what our five-year average has been there. So, you know, we'll look to see if we got some recovery, you know, back in August, which is normal. And then September, as you know, is pretty much our strongest month of the year. So can we see, you know, a stronger acceleration going into the end of the quarter? You know, I would hope so.

Kevin M. Freeman: We'll look to see if we get some recovery back in August , which is normal, and then September , as you know, is pretty much our strongest month of the year, so can we see stronger acceleration going into the end of the quarter?

Adam Satterfield: You know, I would hope so. We saw strong performance in March; strong performance in June. And, you know, that can repeat. You know, we'll see where we land. But, but, but that's kind of, you know, the lay of the land and what things are looking like at the moment.

Adam N. Satterfield: We saw strong performance in March and strong performance in June. And, you know, if that can repeat, we'll see where we land. But that's kind of, you know, the lay of the land and what things are looking like at the moment. And, of course, we'll update, as I mentioned earlier, with the final July numbers and then the mid-quarter update with our August trend. Okay, yeah, thank you for that. There is just one other quick one.

Speaker Change: I would hope so. We saw strong performance in March, strong performance in June , and if that can repeat, we'll see where we land.

Kevin M. Freeman: But that's kind of, you know, the lay of the land and what things are looking like at the moment. And, of course, we'll update, as I mentioned earlier, with the final July and then the mid-quarter update with our August trends.

Adam Satterfield: And, of course, we'll update, as I mentioned earlier, with the final July and then the mid-quarter update with our August tree. Okay.

Adam N. Satterfield: On headcount, how are you thinking about headcount sequentially? Are you, you know, kind of a flattish volume environment? Are we modeling headcount down a little bit sequentially? Or are you kind of keeping it flat and keeping some capacity for when the volume improves? Well, I think we're in a good spot from an overall headcount standpoint. We are, at the end of June, 150 to 200 people ahead of where we were in September last year when we were handling 51,000 shipments per day. So, you know, we're in a good spot there. You know, it drifted down just because of normal attrition kind of taking place through the second quarter.

Adam Satterfield: Thank you for that. Just one other quick one on head count. How are you thinking about head count sequentially? Are you, you know, kind of a flatish volume environment? Are we modeling head count down a little bit sequentially? Are you kind of keeping it flat and keeping some capacity for when the volume improves?

Speaker Change: Okay, yeah, thank you for that. Just one other quick one. On headcount, how are you thinking about headcount sequentially? Are you, you know, in kind of a flattish volume environment? Are we modeling headcount down a little bit sequentially, or are you kind of keeping it flat and keeping some capacity for when the volume improves?

Adam Satterfield: Well, I think we're in a good spot from the overall head count standpoint. We're at the end of June; we're 150 to 200 people ahead. Where we were in September last year when we were handling 51,000 shipments per day. So, you know, we're we're we're in a good spot there. You know, we've been drifted down just normal attrition, kind of taking place through the second quarter. And, you know, that continues to the curve as we go through the second half of the year. You know, we're always balancing, you know, the changes and so forth. Generally, in alignment with what our shipment can.

Speaker Change: Well, I think we're in a good spot from an overall headcount standpoint. We're, at the end of June , we're 150 to 200 people ahead of where we were in September of last year when we were handling

Speaker Change: 51,000 shipments per day.

Speaker Change: We're in a good spot there. It drifted down, just normal attrition kind of taking place through the second quarter.

Adam N. Satterfield: And, you know, if that continues to occur as we go through the second half of the year, you know, we're always balancing the changes and so forth, generally in alignment with what our shipment counts are and how they're changing. So, you know, it'll be something that we continue to watch and deal with. You know, at this point, we're getting closer to where you generally have the seasonally slower parts of the year once we get into 4Q and 1Q. But, you know, we're keeping our eye out for what 2025 might look like. And you don't wait until it's coming at you.

Speaker Change: If that continues to occur as we go through the second half of the year, we're always balancing the changes.

Adam Satterfield: So, and how they're changing. So, you know, it'd be something that we continue to watch and deal with.

Speaker Change: and so forth, generally in alignment with what our shipment counts are and how they're changing. So, you know, it'll be something that we continue to watch and deal with, but, you know, at this point we're...

Adam Satterfield: But, you know, at this point where we're getting closer to where you generally have a seasonally slower parts of the year, once we get in the 4Q and 1Q. But, you know, we're keeping our eye out for, you know, what 2025 might look like. And you don't wait until it's coming at you. You've got to get ahead of the curve, if you will. And that's why this year we invested so much. And we are ways are investing in our people. And we started our truck driving schools and so forth. And it continued to increase the number of employees with their CDLs to be ready for when our customers calling us and they need capacity.

Speaker Change: We're getting closer to where you generally have the seasonally slower parts of the year once we get into 4Q and 1Q, but you know, we're keeping our eye out for

Speaker Change: what 2025 might look like. And you don't wait until it's coming at you. You got to get ahead of the curve, if you will. And that's why this year we invested so much and we always are investing in our people and restarted our truck driving schools.

Adam N. Satterfield: You've got to get ahead of the curve, if you will. And that's why this year we invested so much. And we always invest in our people and restart our truck driving schools and so forth. And we're going to continue to increase the number of employees with their CDLs to be ready when our customers call on us and they need capacity. We want to be in a position to respond with a yes, we can help you versus trying to catch up and be reactive. Thank you for your time. The next question is from John Chappell with Evercore ISI. Please go ahead. Thank you. Good morning.

Speaker Change: and so forth, and it continued to...

Speaker Change: Increase the number of employees with their CDLs to be ready for when our customers call on us and they need capacity. We want to be in a position to be able to respond with a yes, we can help you versus trying to play catch up and be reactive.

Adam Satterfield: We want to be in a position to be able to respond with a yes. We can help you versus trying to deploy, catch up, and be reactive.

Unknown Executive: Great.

Unknown Executive: Thank you for the time.

John Chappelle: The next question is from John Chappelle with Evercore ISI. Please go ahead.

Speaker Change: Great, thank you for the time.

Speaker Change: The next question is from John Chappell with Evercore ISI. Please go ahead.

John Chappelle: Thank you.

Jonathan B. Chappell: Adam, you know as well as anybody the bare thesis about capacity coming online, whether it's the yellow terminals that were auctioned or the organic growth by some of your peers and what that may be the pricing. Sounds like the early stages of 3Q pricing have been relatively consistent. But as we think about the anniversary of the yellow bankruptcy starting in 4Q, especially from a yield perspective, is there any reason why you wouldn't see typical seasonal trends in yield beyond this summer?

Adam Satterfield: Good morning. And I mean, as well as anybody, the Barathees is about capacity coming online, whether it be able to terminals that were auctioned or the organic growth by some of your peers and what that made you. The pricing sounds like early stages of 3Q pricing has been relatively consistent.

Jonathan B. Chappell: Thank you. Good morning. Adam, we know as well as anybody, the Barrett thesis about capacity coming online, whether it's, you know, the terminals that were auctioned or.

Jonathan B. Chappell: The Organic Growth by some of your peers and what that may be, the pricing. Sounds like early stages of 3Q pricing has been relatively consistent, but as we think about the anniversary...

Adam Satterfield: But as we think about the anniversary, you know, the yellow bankruptcy starting for Q most especially from a yield perspective, is there any reason why you wouldn't see typical seasonal trends and yield beyond, you know, this summer, whether that relates to capacity or any other factors in the market. Like I said earlier, maybe to just elaborate on that, but we're continuing to see good yield performance. And that's what we expect. I mean, this is something that we work on day by day. Our sales team and our pricing and costing teams are all working together and working with our customers to ultimately provide value to their supply chains.

Speaker Change: You know, the yellow bankruptcy starting in 4Q, most especially from a yield perspective. Is there any reason why you wouldn't see typical seasonal trends in yield beyond, you know, this summer? Whether that relates to capacity or any other factors in the market?

Adam N. Satterfield: Whether that relates to capacity or any other factors in the market, now, like I said earlier, maybe to just elaborate on that, but we're continuing to see good yield performance, and that's what we expect. I mean, this is something that we work on day by day. Our sales team and our pricing and costing teams are all working together and working with our customers to ultimately provide value to their supply chains. Our yield management philosophy is to attain increases that are not necessarily market-driven in a sense of whether the market's in our favor or not.

Speaker Change: Now, like I said earlier, maybe to just...

Speaker Change: Elaborate on that but we're we're continuing to see good yield performance and and that's what we expect. I mean, this is something that

Speaker Change: We work on day-by-day. Our sales team and our pricing and costing teams are all working together and working with our customers to

Adam Satterfield: But, you know, our yield management philosophy is to attain increases that not necessarily are market driven in a sense of the market in our favor or not. It's what's our cost inflation looking like, and then what are the continuing needs of our business, and that's been a long current philosophy that is consistent and has worked for us. And so that's what we would continue to expect as we move forward as well. And, you know, we're negotiating and working every day. And I would expect that as any contracts are coming to you, that we will work through and need to obtain increases on us.

Speaker Change: ultimately provide value to their supply chains but our yield management philosophy is to attain increases that are not necessarily market-driven in a sense as to whether the market is in our favor or not.

Adam N. Satterfield: It's what is our cost inflation looking like, and then what are the continuing needs of our business? And that's been a long-term philosophy that is consistent and has worked for us. And so that's what we would continue to expect as we move forward as well. We're negotiating and working every day, and we would expect that as any contracts are coming due, we will work through them and need to obtain increases on those. So regardless of what other carriers and specific issues or areas or whatnot may be going on, we expect that we'll continue to see a disciplined environment in the industry.

Speaker Change: What's our cost inflation looking like and then, you know, what are the continuing needs of our business and that's been a long term philosophy that is consistent and has worked for us. And so that's what we would continue to expect as we move forward as well.

Speaker Change: We're negotiating and working every day, and I would expect that...

Speaker Change: As any contracts are coming due that we will work through and need to obtain increases on those.

Adam Satterfield: So, you know, regardless of what other carriers and specific issues or areas or what not may be going on, we expect that we'll continue to see a disciplined environment in the industry. And that's what we've seen thus far. So we'll just continue to manage through that and keep sort of focusing on what we do and what we can deliver and continue to add value to our customer supply chains.

Speaker Change: Regardless of what, you know, other carriers and specific issues or areas or whatnot.

Speaker Change: may be going on, we expect that we'll continue to see a disciplined

Adam N. Satterfield: And that's what we've seen thus far. So we'll just continue to manage through that and keep sort of focusing on what we do and what we can deliver and continue to add value to our customer supply chain. Okay, thank you. The next question is from Eric Morgan with Barclays. Please go ahead. Hey, good morning.

Speaker Change: Environment and Industry and that's what we've seen thus far so we'll just continue to manage through that and keep sort of focusing on what we do and what we can deliver and continue to add value to our customer supply chains.

Eric Morgan: The next question is from Eric Morgan with Barclays. Please go ahead.

Speaker Change: Okay. Thank you, Adam.

Speaker Change: The next question is from Eric Morgan with Barclays. Please go ahead.

Eric Morgan: Hey, good morning. Thanks for asking, or for taking my question. I wanted to ask one on cost inflation. Your comprehensive employees been up maybe mid-single digits or so for about a year now. Just wondering, as you think about another wage increase later this quarter, and you know, it's broader inflation measures. I'm just wondering if there's a trending down a little bit. Should we start to see that moderate? And maybe how does that factor into the sequential OR outlook for 3Q? Thanks.

Eric Thomas Morgan: Thanks for asking or for taking my question. I wanted to ask one on cost inflation. Your comp for employees has been up, or so for about a year now. Just wondering, as you think about another wage increase later this quarter and its broader inflation measures, down a little bit. Should we start to see that moderate?

Eric Thomas Morgan: Hey, good morning. Thanks for asking or for taking my question. I wanted to ask one on cost inflation. Your comp per employee has been up maybe mid-single digits or so for

Eric Thomas Morgan: for about a year now. Just wondering, as you think about another wage increase later this quarter,

Eric Thomas Morgan: And, you know, as broader inflation measures are trending down a little bit, should we start to see that moderate? And maybe how does that factor into the sequential OR outlook for 3Q? Thanks.

Adam N. Satterfield: Maybe how does that factor into the sequential O.R. outlook for the company? Well, generally speaking, when you look over the longer term, when you look at our cost per shipment, if you will, wage cost per shipment is generally going up about three to three and a half percent and more in line with what the wage increase that we give every year has been. There's been inflation that we've seen in our benefit costs, though, and we experienced some of that as well in the second quarter.

Adam Satterfield: Well, generally speaking, when you look over the longer term, you know, our, when you look at our cost per shipment, if you will, wage cost per shipment. It's generally going up about three to three and a half percent and more in line with what the wage increase that we give every year. There's been inflation that we've seen in our benefit cost, though, and we experienced some of that as well. In the second quarter, and you know, those fringe benefit costs include multiple factors, some of which are improvements to the overall cost program that we offer to employees and things like pay time off benefits that we've improved over the years and the quality of our group health and general programs as well.

Speaker Change: Well, generally speaking, when you look over the longer term, you know, our

Speaker Change: When you look at our cost per shipment, if you will, wage cost per shipment, it's generally going up about 3 to 3.5% and more in line with...

Speaker Change: with what the wage increase that we give every year has been. There's been inflation that we've seen in our benefit costs.

Adam N. Satterfield: And, you know, those fringe benefit costs include multiple factors, some of which are improvements to the overall compensation program that we offer to employees and things like paid time off benefits that we've improved over the years and the quality of our group health and dental programs as well.

Speaker Change: We experienced some of that as well in the second quarter, and those fringe benefit costs include multiple factors, some of which are improvements to the overall comp program that we offer to employees.

Speaker Change: things like paid time off benefits that we've improved over

Adam N. Satterfield: So, I mean, those are incremental changes that we're always having to manage, and maybe there's a little bit more variability in terms of when you're self-insured on the health program, you can have changes in one quarter versus the next that aren't necessarily going in alignment with what shipment volumes may be changing. But, you know, looking over time, that's just something that we would expect to continue to change and reflect improvements in terms of the benefit program and compensation program that we offer employees.

Speaker Change: The quality of our group health and dental programs as well.

Adam Satterfield: So I mean, those are incremental changes that we're always having to manage, and maybe there's a little bit more variability in terms of when you're self-insured on the health program. You can have changes in one quarter versus the next that aren't necessarily going into alignment with what shipment volumes may be changing. But, you know, looking over time, that's just something that we would expect, you know, will continue to change and reflect the improvements in terms of the benefit program and in comp program that we offer employees. You know, 65% of our cost are salaries, wages, and benefits.

Speaker Change: So, I mean, those are incremental changes that we're always having to manage, and maybe there's a little bit more variability.

Speaker Change: In terms of when you're self-insured on the health program, you can have...

Adam N. Satterfield: But, you know, 65% of our costs are salaries, wages, and benefits. So, that's generally been the biggest driver of our total cost for shipment inflation. It's averaged three and a half to four percent over the long term as well. So, you know, that all goes into it.

Speaker Change: The Benefit Program and Comp Program that we offer employees.

Adam Satterfield: So that's generally been the biggest driver of our total cost for shipment inflation that's averaged three and a half to four percent over the long term as well. So, you know that all goes into it.

Speaker Change: You know, 65% of our costs are salaries, wages, and benefits, so that's generally been the biggest driver.

Speaker Change: of our total cost for shipment inflation. It's averaged 3.5 to 4%.

Adam Satterfield: We've had a lot of other incremental inflationary items, things like the cost of our equipment maintenance costs that have been up double digits on a per mile basis the last few years; insurance cost that is a problem for the industry that have been up double digits for multiple years in a row. So all of those things we continue with, and that's why there's got to be an ongoing focus on operating efficiency and discretionary spending. You know, we're managing our cost day by day and good times and bad. If you wait until it's too late, if you wait until they're bad times, you've got to have that focus going every day, or you may not even know where to start.

Speaker Change: Over the long term as well.

Speaker Change: You know, that all goes into it. We've had a lot of other incremental inflationary items, things like the cost of our equipment.

Adam N. Satterfield: We've had a lot of other inflationary items, things like the cost of our equipment, maintenance costs that have been up double digits on a per mile basis for the last few years, and insurance costs, which is a problem for the industry, that have been up double digits for multiple years in a row. All of those things we continue to do, and that's why there's got to be an ongoing focus on operating efficiency and discretionary spending.

Speaker Change: maintenance costs that have been up double digits on a per mile basis the last few years, insurance costs that is a problem for the industry that have been up double digits for multiple years.

Speaker Change: All of those things we contend with and that's why there's got to be an ongoing focus on operating efficiency and discretionary spending. We're managing our costs day by day in good times and bad. If you wait until...

Adam N. Satterfield: And, you know, we're managing our costs day by day in good times and bad. If you wait until it's too late, if you wait until they're bad times, you've got to have that focus going every day, or you may not even know where to start.

Speaker Change: It's too late if you wait until they're bad times. You've got to have that focus going every day or you may not even know where to start.

Adam N. Satterfield: So, that's something that we're always looking at. How can we offset all those other costs to basically keep our cost inflation in check? And then, as you know, the yield management philosophy is that we try to achieve 100 to 150 basis points of positive spread over top of that cost inflation metric. So, that keeps our pricing levels in check with the rest of the industry as well. So, you know, it all kind of goes into it, but it's a day-by-day fight to try to keep our cost inflation minimized as best as we can. I appreciate it. The next question is from Bascome Majors with Susquehanna. Please go ahead.

Adam Satterfield: So that's something that we're always looking at. How can we offset all those other costs to basically keep our cost inflation in check, and then, you know, the yield management philosophy is we try to achieve 100 to 150 basis points of positive spread over top of that cost inflation metric. So that keeps our pricing levels in check with the rest of the industry as well. So, you know, it all kind of goes into it, but it's a day-by-day fight to try to keep our cost inflation minimized as best as we can.

Speaker Change: That's something that we're always looking at, how can we offset all of those other costs, to basically keep our cost inflation in check, and then, as you know, the yield management philosophy is we try to achieve 100 to 150 basis points of positive yield.

Speaker Change: Spread over top of that cost inflation metric.

Speaker Change: That keeps our pricing.

Speaker Change: levels in check with the rest of the industry as well. So, you know, it all kind of goes into it, but it's a day-by-day fight to try to keep our cost inflation minimized as best as we can.

Bascome Majors: The next question is from Bascome Majors with Seth Gujana. Please go ahead.

Speaker Change: Appreciate it.

Speaker Change: The next question is from Basco Majors with Susquehanna. Please go ahead.

Bascome Majors: Adam, it's encouraging to hear that some signs of seasonality have stuck with you through July so far, and appreciate the framing of typical 3QC's now and with the top line and the margin side.

Bascome Majors: Adam, it's encouraging to hear that some signs of seasonality have stuck with you through July so far, and I appreciate the framing of typical 3Q seasonality on both the top line and the margin side. Can we look ahead to 4Q without necessarily blessing whether the market suggests we'll be above or below, but how do you frame seasonality for your business into 4Q, both on a top line and a margin basis, looking back historically as we try to level set our views?

Bascome Majors: Adam, it's encouraging to hear that some signs of seasonality have stuck with you through July so far and appreciate the framing of typical 3Q seasonality on both the top line and the margin side.

Adam Satterfield: Can we look ahead to fork you without necessarily blessing whether the market suggests will be above or below, but having you frame seasonality, life of your business into 4Q, both on top line and the margin basis, looking back historically as we try to level set our views. Thank you. Yeah, so as I've said a couple of times, the fourth quarter and the first quarter are seasonally slower periods, if you will. The fourth quarter, from just a pure revenue per day standpoint, it's just a slight drop off, and then you go into the first quarter and revenue is down, maybe down in the fourth quarter, half a percent, clinically versus the third quarter, and then you drop on average about a percent and a half going into the first quarter.

Bascome Majors: Can we look ahead to 4Q without necessarily blessing whether, you know, the market suggests we'll be above or below, but how do you frame seasonality for your business into 4Q, both on top line and a margin basis, looking back historically as we try to level set our views? Thank you.

Bascome Majors: Yeah, so, as I've said a couple of times, the fourth quarter and the first quarter are seasonal slower periods, if you will. The fourth quarter, from just a pure revenue per day standpoint, it's just a slight drop off, and then you go into the first quarter, and revenue is down, you know, maybe down half a percent sequentially versus the third quarter, and then you drop on average about a percent and a half going into the first quarter. From an operating ratio standpoint, the fourth quarter is typically about 200 to 250 basis points higher than the third, and, you know, a lot of that is the revenue level softening a little bit.

Speaker Change: Yes, as I've said a couple of times, the fourth quarter and the first quarter

Speaker Change: or seasonally slower periods, if you will.

Speaker Change: The fourth quarter, from just a pure revenue per day standpoint, it's just a slight drop off, and then you go into the first quarter and revenue is down, maybe down in the fourth quarter half a percent sequentially.

Speaker Change: versus the third quarter, and then you drop on average about a percent and a half going into the first quarter. From an operating ratio standpoint, the fourth quarter is typically about 200 to 250 basis points.

Adam Satterfield: From an operating ratio standpoint, the fourth quarter is typically about 200 to 250 basis points higher than the third. You know, a lot of that is the revenue level softening a little bit. We've got three months of that wage increase. And that normal change, if you remember from last year, we always have an actual assessment of our insurance reserves in the fourth quarter, and those adjustments can go one way or the other. I generally view those as a reconciling item to whatever that normal change is. And last year was an unfavorable adjustment to that insurance and claims line a few years prior.

Speaker Change: higher than the third and you know a lot of ideas that the revenue level softening a little bit We've got three months of that wage increase

Adam N. Satterfield: We've got three months of that wage increase, and that normal change. If you remember from last year, we always have an actuarial assessment of our insurance reserves in the fourth quarter, and those adjustments can go one way or the other. I generally view those as a reconciling item to whatever that normal change is, and, you know, last year was an unfavorable adjustment to that insurance and claims line. A few years prior, they had been favorable adjustments, so kind of throw that out of the window when just looking at what is that normal cost progression change. Thank you. The next question is from Ken Hoexter with Bank of America. Please go ahead. Great. Thanks, and good morning.

Speaker Change: And that normal change, if you remember from last year, we always have a...

Speaker Change: I generally view those as a reconciling item to whatever that normal change is.

Speaker Change: Last year was an unfavorable adjustment to that insurance and claims line, but a few years prior they had been favorable adjustments, so kind of throw that out of the window when just looking at what is that normal cost progression change.

Adam Satterfield: They had been favorable adjustments. So kind of throw that out of the window when just looking at what is that normal cost progression change. Thank you.

Ken Hexter: The next question is from Ken Hexter with Bank of America. Please go ahead.

Speaker Change: Thank you.

Speaker Change: The next question is from Ken Hoexter with Bank of America. Please go ahead.

Ken Hexter: Great. Thanks and good morning. I guess maybe I need to check numbers a little bit.

Kenneth Scott Hoexter: I guess maybe I need to check the numbers a little bit. I think we've got a 10-year average in the second quarter or the third quarter of a 10 basis point improvement, not a 50 basis point decrease. So I just wanted to double check that.

Kenneth Scott Hoexter: Great. Thanks and good morning.

Adam Satterfield: I think we've got a 10-year average in the second quarter or the third quarter of a 10 basis point improvement, not a 50 basis point decrease. So I just wanted to double-check that. And then, as you start to lap the yellow freight data last year, you went from down upper teens on revenue per day and mid teens, tons per day to kind of much smaller losses. I guess given that backdrop, how should we think about the market kind of tonnage per day growth? I know you've talked a lot about revenue per day, but how do we think about the tons per day shift as we move into the third quarter or into the back half of the third quarter and into the fourth quarter?

Kenneth Scott Hoexter: I guess maybe I need to check numbers a little bit. I think we've got a 10 year average in second quarter or the third quarter of a 10 basis point improvement, not a not a 50 basis point decrease. So I just wanted to double check that and then as you start to lap the yellow freight

Adam N. Satterfield: And then as you start to lap the yellow freight data, last year, you went from down the upper teens on revenue per day and mid teens tons per day to kind of much smaller losses. I guess, given that backdrop, how should we think about the market for tonnage per day growth? I know you've talked a lot about revenue per day, but how do we think about the tons per day shift as we move into the third quarter or into the back half of the third quarter and into the fourth quarter?

Speaker Change: Data, last year you went from down upper teens

Speaker Change: on revenue per day and mid-teens tons per day to kind of much smaller losses, I guess.

Speaker Change: Given that backdrop, how should we think about the market, kind of tonnage per day growth? I know you've talked a lot about revenue per day, but how do we think about the tons per day shift as we move into the back half of the third quarter and into the fourth quarter?

Adam Satterfield: Yeah, and I'll come back to that. Let me just address that the second quarter, the third quarter change. You're right. The pure math is more about a 10 basis point change, but there are a couple of years in there that skew that and 23 last year. Obviously, we had a major acceleration in revenue that allowed us to improve the operating ratio 170 basis points from the 2Q to 3Q in the 2020. It was similar, where you had the COVID cliff that happened and then the reacceleration of business level. So when I just look at more of a normalized kind of progression, that's typically what we'd expect, unless you've got something unusual going on that would drive some change there.

Adam N. Satterfield: Yeah, and I'll come back to that. Let me just address the second quarter to third quarter change. You're right, the pure math is more about a 10 basis point change, but there are a couple of years in there that skew that.

Speaker Change: Yeah, and I'll come back to that. Let me just address that the second quarter to third quarter change. You're right, the pure math is more about a 10 basis point change, but there are a couple of years in there that skew that.

Adam N. Satterfield: In 23, last year, obviously, we had a major acceleration in revenue that allowed us to improve the operating ratio 170 basis points from 2Q to 3Q. And then 2020 was similar, where you had the COVID cliff that happened and then the reacceleration of business levels. So when I just look at more of a normalized kind of progression, that's typically what we'd expect, unless you've got something unusual going on that would drive some change there.

Speaker Change: and 23 last year. You know, obviously we had a major acceleration in revenue.

Speaker Change: That allowed us to improve the operating ratio of 170 basis points from 2Q to 3Q in 2020.

Kevin M. Freeman: Kevin Freeman, Unknown Executive

Adam N. Satterfield: With respect to the tonnage question and shipments, obviously, as you said, we had the acceleration that was meaningfully happening last year. If you recall, we were at 47,000 shipments per day, really, from December 22 through July 23, and immediately stepped up to about 50,000 in August and then accelerated further to 51,000 in September. So a step function change that would be well above anything that was really happening with the underlying economy, if you will.

Adam Satterfield: With respect to the tonnage question and shipments, me obviously, as you said, we had the acceleration that was meaningfully happening last year. If you recall, we were at 47,000 shipments per day, really, from December of '22 through July of '23 and immediately stepped up to about 50,000 in August and then accelerated further to 51,000 in September. So step function change that would be well above anything that was really happening with the underlying economy, if you will. So if we can see some type of normal acceleration, if you will, just like from a tonnage standpoint, or 10-year average from July to August is six tenths of the percent increase there, and then about a three and a half percent increase in September.

Speaker Change: that would drive some change there. With respect to the tonnage.

Speaker Change: question and shipments. I mean, obviously, as you said, you know, we're, we're, we had the acceleration that was meaningfully happening.

Speaker Change: Last year, if you recall, we were at 47,000 shipments per day.

Speaker Change: Really from December of 22 through July of 23.

Speaker Change: and immediately stepped up to about $50,000 in August and then accelerated further to $51,000 in September . So, you know, step function change that would be well above anything that was really happening with the underlying economy, if you will.

Speaker Change: If we can see some type of normal acceleration, if you will, just like from a tonnage standpoint, or can your average from July to August is...

Adam N. Satterfield: So if we can see some type of normal acceleration, if you will, just like from a tonnage standpoint, our 10-year average from July to August is six-tenths of a percent increase there, and then about a three-and-a-half percent increase in September. So we'll see how that goes. But right now, even if you hit those, it would look like you would have, you know, a negative change in those volumes.

Speaker Change: 6 tenths of a percent increase there, and then about a three and a half percent increase in September .

Adam Satterfield: So we'll see how that goes, but right now, even if you hit those, it would look like you would have. and a negative change in those volumes. But overall, I think it's just as we look at things sequentially, maybe more so than just a year over a year. Given that challenge, is what can we achieve relative to what normal seasonality would be and what we've seen, you know, at least so far through July. From a tons per day's standpoint, just from a pure quarter, we're typically up about 1%, and you know, when we gave the numbers earlier, but in the second quarter, that average is just call it 6%, and we wrote three just sort of around the number.

Speaker Change: We'll see how that goes, but right now, even if you hit those, it would look like you would have...

Adam N. Satterfield: But, you know, overall, I think it's just as we look at things sequentially, maybe more so than just the year over year, given that challenge, is what can we achieve relative to what normal seasonality would be and what we've seen, you know, at least so far through July. From a tons per day standpoint, just from a pure quarter, we're typically up about one percent. And, you know, when we gave the numbers earlier, but in the second quarter, that average is just called six percent, and we were up three, just sort of rounding numbers.

Speaker Change: You know, negative change in those volumes, but you know, overall, I think it's just as we look at things sequentially, maybe more so than just the year over year, given that challenge.

Speaker Change: is what can we achieve relative to what normal seasonality would be and what we've seen, you know, at least so far through July .

Speaker Change: From a tons per day standpoint, just from a pure quarter.

Speaker Change: We're typically up about 1%.

Speaker Change: and you know when we gave the numbers earlier but in the second quarter that average is just call it six percent and we were up three just sort of rounding numbers so we were up kind of half.

Adam N. Satterfield: So we were up kind of half of what normal seasonality would suggest, so we've got to make up some ground. You know, like I said earlier, we always lose a little bit of business in July. And that's normal.

Adam Satterfield: So we wrote kind of half of what normal seasonality would suggest. So we've got to make up some ground; you know, like I said earlier, we always lose a little bit of business in July, and that's normal. And so if we can have kind of a little bit of acceleration through August, and you know, and then see some some acceleration into September, you know, we were almost at normal seasonality in the June period. And so in the same thing with March, you know, you got to adjust for the Good Friday, but we're about at seasonality in those stronger growth months at a quarter.

Speaker Change: of what normal seasonality would suggest. So we've got to make up some ground.

Speaker Change: Like I said earlier, we always lose a little bit of business in July .

Adam N. Satterfield: And so if we can have kind of a little bit of acceleration through August and, you know, and then see some acceleration into September, you know, we were almost at normal seasonality in the June period. And so and the same thing with March, you know; you've got to adjust for Good Friday, but we're about at seasonality in those stronger growth months of the quarter. So if we can make some progress in August and then see some sense of that strong acceleration through the month of September, you know, I think we'll be OK. And we've positioned ourselves well. You know, whenever we come out of this true economic downturn, you know, we're operating at a seventy two, essentially, and seventy nine. I guess I should take credit for every basis point we have.

Speaker Change: And that's normal. And so if we can have kind of a little bit of acceleration through August and, you know, and then see some, some acceleration into September .

Speaker Change: We were almost at normal seasonality in the June period, and the same thing with March. You've got to adjust for the Good Friday, but we're about at seasonality in those stronger growth months.

Adam Satterfield: So if we can make some progress in August and then see some sense of that strong acceleration through the month September, you know, I think we'll be okay. And we've positioned ourselves well; you know, whenever we come out of this true economic downturn, you know, we're operating at a 72 essentially and 71 nine, I guess I should take credit for every basis point we have. And in terms of where we've operated and when I look at the breakdown of our operating ratio in the quarter and where we are from an overhead standpoint relative to our direct variable cost, I'm really pleased with the improvement that we've made with our direct cost performance.

Speaker Change: of the quarter. So if we can make some progress in August and then see some sense of that strong acceleration through the month of September , I think we'll be okay. And we've positioned ourselves well, whenever we come out of this

Speaker Change: We are operating at a 72% essentially and a 71.9% I guess I should take credit for every basis point we have in terms of where we have operated. When I look at the breakdown of our operating ratio,

Adam N. Satterfield: And in terms of where we've operated and when I look at the breakdown of our operating ratio in the quarter and where we are from an overhead standpoint relative to our direct variable cost, I'm really pleased with the improvement that we've made with our direct cost performance. And that just gets into the day to day management, you know, within our operations in the field, primarily, and but everyone is contributing to that overall operating ratio, and our overhead costs have increased. They're 20 to 21 percent of revenue in the most recent quarter. You know, those costs have been down to around 17 percent in the past.

Speaker Change: in the quarter and where we are from an overhead standpoint.

Speaker Change: Relative to our direct variable cost. I'm really pleased with the improvement that we've made.

Adam Satterfield: And that just gets into the day-to-day management, you know, within our operations in the field, primarily. And that everyone is contributing to that overall operating ratio, and but our overhead cost of increase, they're 20 to 21% of revenue. And the most recent quarter, you know, those costs have been down to around 17% in the past. So, you know, once we get some true density coming back into the network, we've built our network and our system to accommodate more than 50,000 shipments a day. So once we get back into, you know, 55,000, 60,000, whatever, but that number is, that's where you'll really see the power of operating density in the model, and you move that scale from 20 to 21% back towards 17.

Speaker Change: With our direct cost performance, and that just gets into the day-to-day management, you know, within our operations in the field, primarily.

Speaker Change: But everyone is contributing to that overall operating ratio, but our overhead costs have increased. They're 20 to 21% of revenue.

Adam N. Satterfield: So, you know, once we get some true density coming back into the network, we've built our network and our system to accommodate more than 50,000 shipments a day. So once we get back into, you know, 50,000, 55,000, 60,000, whatever that number is, that's where you'll really see the power of operating density in the model. And if you move that scale from 20 to 21 percent back towards 17, you know, that puts us back in and, with an OR with a six handle on it, back where we were in 2022.

Speaker Change: in the most recent quarter, you know, those costs have been down to around 17% in the past. So, you know, once we get some true density coming back into the network, we've built our network and our system to accommodate more than 50,000 shipments a day. So once we get back into, you know, 50,000, 55,000, 60,000, whatever that number is, that's where you'll really see the power of operating density in the model. And you move that scale from 20 to 21% back towards 17, you know, that puts us back in with an OR with a six handle on it back where we were in 2022.

Adam Satterfield: And, you know, that puts us back in with the no war with the six handle on it back where we were in 2022. So, you know, it's, I think we're in a great spot and have managed through this downturn very well and has certainly put ourselves in a great position to capitalize on the market when we actually start seeing some economic winds that are back. Thanks for the time.

Adam N. Satterfield: So, you know, I think we're in a great spot and have managed through this downturn very well and certainly put ourselves in a great position to capitalize on the market when we actually start seeing some economic wins that are back. Thanks for the time, Adam. Appreciate it. The next question is from Brian Ossenbeck with J.P. Morgan. Please go ahead.

Speaker Change: I think we're in a great spot and have managed through this downturn very well, and have certainly put ourselves in a great position to capitalize on the market when we actually start seeing some economic wins that are back.

Brian Austin Beck: I appreciate it.

Brian Austin Beck: The next question is from Brian Austin Beck with JP Morgan.

Speaker Change: Thanks for the time, Adam. Appreciate it.

Brian Austin Beck: Please go ahead. Hey, good morning.

Speaker Change: The next question is from Brian Ossenbeck with J.P. Morgan. Please go ahead.

Brian Patrick Ossenbeck: Hey, good morning. Thanks for taking the question. So Adam, maybe you can elaborate a little bit more on what end markets or maybe customers are seeing some of that strength at the end of the last two quarters in March and June. Is there anything to read into that? Does it give you any sort of forward look into the back half of the year or next year?

Marty Freeman: Thanks for taking the question. So, Adam, maybe you can elaborate a little bit more on wet end markets, or maybe customers you're seeing some of that strength at the end of the last two quarters in March and June. Is there anything to read into that?

Kevin M. Freeman: And then just kind of another follow-up on competition and extra capacity coming online. Are you seeing anything as these new facilities come back online that you would call out from either service being disrupted by some of your competitors or are they being a little bit more aggressive to maybe fill some of those doors and pricing more to capacity and not necessarily, Good morning, this is Marty. I'm going to answer your customer question.

Brian Patrick Ossenbeck: Hey, good morning. Thanks for taking the question.

Brian Patrick Ossenbeck: So Adam, maybe you can elaborate a little bit more on what end markets or maybe customers are seeing some of that strength at the end of the last two quarters in March and June . Is there anything...

Marty Freeman: Does it give you any sort of forward look into the back half of the year or next year?

Speaker Change: Let's read into that. Does it give you any sort of forward look into the back half of the year or next year? And then just kind of another follow-up on competition and extra capacity coming online. Are you seeing anything as these new facilities come back online?

Marty Freeman: And then just kind of another follow-up on the competition and extra capacity coming online? Are you seeing anything as these new facilities come back online? Anything that you would call out from either service being disrupted by some of your competitors? Or are they being a little bit more aggressive to maybe fill some of those doors and pricing more to capacity and not necessarily cost?

Speaker Change: Anything that you would call out from either service being disrupted by some of your competitors, or are they being a little bit more aggressive to maybe fill some of those doors and pricing more to capacity and not necessarily cost?

Marty Freeman: Good morning, Mrs. Marty.

Marty Freeman: I'm going to answer your customer question. I'm skill heavily involved with a lot of our top customers, and the feeling out there is not all doom and gloom. In fact, our top 50 customers are up mid-single digits here today. So we're getting a lot of positive remarks, especially from my larger customers. And they as well see some positive things, you know, for the rest of the year. So we're very positive. And those things will continue. And as Adam said earlier, they feel, and I feel, like we can see some interest rate drops toward the end of the year.

Kevin M. Freeman: I'm still heavily involved with a lot of our top customers, and the feeling out there is not all doom and gloom. In fact, our top 50 customers are up, you know, mid single digits year to date. So we're getting a lot of positive remarks, especially from our larger customers. We, and they as well, see some positive things for the rest of the year, so we're very positive that those things will continue. And as Adam said earlier, they feel, and I feel, if we can see some interest rate drops toward the end of the year, I think we'll really accelerate, so we're looking forward to that and prepared to handle it, so Yeah, and on the competitive side.

Speaker Change: Good morning, this is Marty. I'm going to answer your customer question. I'm still heavily involved with a lot of our top customers.

Speaker Change: The feeling out there is not all doom and gloom. In fact, our top 50 customers are up, you know, mid single digits year to date. So we're getting a lot of positive remarks, especially from our larger customers.

Speaker Change: They as well see some positive things for the rest of the year, so we're very positive all of a sudden that those things will continue, and as Adam said earlier,

Adam N. Satterfield: They feel, and I feel, if we can see some interest rate drops toward the end of the year, I think we'll really accelerate. So we're looking forward to that and prepared to handle it. So it's not all doom and gloom out there, trust me.

Marty Freeman: I think we'll really accelerate. So we're looking forward to that and prepare to handle it. So it's not all doom and gloom out there. Trust me.

Marty Freeman: Yeah, and on the competitive side, you know, we've not seen, I don't think, any material change in the sense of, you know, someone has opened one service center in whatever market, you know, any type of real impact. And as you can see in our yield trends, things continue to be consistent with our performance. Yeah, that's just something we'll continue to manage through and monitor.

Adam N. Satterfield: You know, we've not seen, I don't think, any material change in the sense of, you know, if someone has opened one service center in whatever market, you know, any type of real impact. And, you know, as you can see in our yield trends, things continue to be consistent with our performance. That's just something we'll continue to manage through and monitor, but given the cost that went into purchasing many of these facilities, we'd be a little surprised to see someone going out and having to be aggressive to try to fill them up. At the end of the day, those service centers served the market for a reason.

Adam N. Satterfield: Yeah, and on the competitive side.

Speaker Change: We've not seen, I don't think, any material change in the sense of someone has opened one service center.

Speaker Change: and whatever market, you know, any type of real impact. And as you can see in our yield trends, things continue to be consistent with our performance.

Speaker Change: That's just something we'll continue to manage through.

Marty Freeman: But given the cost that went into purchasing many of these facilities, we build a little surprise to see someone going out and having to be aggressive to try to fill it up. And at the end of the day, those service centers served the market for a reason. They were in existence. And, you know, those, those particular markets had a customer base that their sales reps called on. And there's LPL shipments that are out there. And, as I referenced earlier, I mean, the market is down overall. And we estimate that it's down about 15% from back from in 2021, but that's something that will recover. Those LPL shipments, those customers will continue to have freight that needs to be moved through an LPL network.

Speaker Change: and Monitor, but given the cost that went into purchasing many of these facilities, we'd be a little surprised to see someone...

Speaker Change: going out and having to be aggressive to try to fill it up. And at the end of the day, those service centers served the market for a reason. They were in existence and, you know, those.

Adam N. Satterfield: They were in existence, and those particular markets had a customer base that their sales reps called on, and there are LTL shipments that are out there. And as I referenced earlier, the market is down overall, and we estimate that it's down about 15% back from where it was in 2021, but that's something that will recover. Those LTL shipments, those customers will continue to have freight that needs to be moved through an LTL network, and I think that that will end up creating an opportunity for us, for the industry in general, to refill those facilities, if you will, once they come online. But to me, it creates maybe even more of an opportunity for Old Dominion specifically.

Speaker Change: Those particular markets had a customer base that their sales reps called on, and there's LTL shipments that are out there.

Speaker Change: As I referenced earlier, I mean, the market is down overall, and we estimate that it's down about 15% from back from in 2021.

Speaker Change: But that's something that will recover, those LTL shipments, those customers will continue to have freight that needs to be moved through an LTL network.

Marty Freeman: And I think that that will end up creating opportunity for us for the industry in general to refill those facilities, if you will, once they come online. But to me, it creates maybe even more of an opportunity for all dominions specifically.

Speaker Change: I think that will end up creating opportunity for us, for the industry in general, to refill those facilities, if you will, once they come online.

Marty Freeman: I agree with that. There's still over 130 facilities that haven't been sold. So that's actually less capacity. When things pick up, then we had one wire. So he was still in business.

Speaker Change: To me, it creates maybe even more of an opportunity for Old Dominion, specifically. I agree with that. There's still over 130 facilities that haven't been sold, so that's actually less capacity when things pick up than we had when YRC was still in business.

Marty Freeman: Okay, thanks very much, guys.

Stephanie Moore: The next question is from Stephanie Moore with Jeffries. Please go ahead.

Adam N. Satterfield: I agree with that. There are still over 130 facilities that haven't been sold, so that's actually less capacity. Okay, thanks very much, guys. The next question is from Stephanie Moore with Jeffreys. Please go ahead. Hi, good morning.

Speaker Change: Okay, thanks very much guys.

Speaker Change: The next question is from Stephanie Moore with Jeffreys. Please go ahead.

Stephanie Moore: Hi, good morning. Thank you.

Adam Satterfield: I wanted to touch a bit on some of your network investments and maybe some of the terminals that have been opened so far this year. So maybe you could give us an update on new terminal openings or door additions. You're to date thus far, and then an update in terms of your plans for maybe the back half of this year. If there's been any kind of maybe postponement or pause, just given the state of the underlying macro, any color there would be helpful. Thanks. Yeah, we've opened three service centers this year, and we'll continue to execute on our capex plan.

Stephanie Lynn Benjamin Moore: Hi, good morning. Thank you.

Stephanie Lynn Benjamin Moore: I wanted to touch a bit on some of your network investments and maybe some of the terminals that have been open so far this year. So maybe you could give us an update on the new terminal openings or door additions year to date thus far, and then an update in terms of your plans for maybe the back half of this year, if there's been any kind of...

Stephanie Lynn Benjamin Moore: Thank you. I wanted to touch a bit on some of your network investments and maybe some of the terminals that have been opened so far this year. So maybe you could give us an update on the new terminal openings or door additions, year-to-date thus far, and then an update in terms of your plans for maybe the back half of this year, if there's been any kind of postponement or pause, just given the state of the underlying macro. Any color there would be helpful.

Speaker Change: Maybe postponement or pause, just given the state of the underlying macro. Any color there would be helpful. Thanks.

Adam N. Satterfield: Thanks. Yeah, we've opened three service centers this year, and we're continuing to execute on our CapEx plan. The current estimate is to spend about $350 million this year, at least on the real estate component of that program.

Speaker Change: Yeah, we've opened three service centers this year, and we're continuing to execute on our CAPEX plan.

Adam Satterfield: The current estimate is to spend about 350 million dollars this year at least on the real estate component of that program. Our plan is we look at the network. We look at the service centers that we feel like need some measure of capacity. And when we look kind of over the next five years and what the anticipated growth curve may be, and the efficiency of the network comes into play as well, the location of where these facilities are. And so that kind of goes into to the overall plan, and we're a little bit heavy right now, frankly. It's not unusual when we go through a slower economic environment to get a little ahead of the curve.

Speaker Change: The current estimate is to spend about $350 million this year.

Adam N. Satterfield: So our plan is we look at the network, we look at the service centers that we feel need some measure of capacity. And when we look kind of over the next five years and what the anticipated growth curve may be, and the efficiency of the network comes into play as well, the location of where these facilities are. And so that kind of goes into the overall plan. And we're a little bit heavy right now, frankly.

Speaker Change: At least on the real estate component of that program.

Speaker Change: Our plan is we look at the network, we look at the service centers that we feel like need some measure of capacity.

Speaker Change: and when we look kind of over the next five years and what the anticipated growth curve may be.

Speaker Change: The efficiency of the network comes into play as well, the location.

Speaker Change: of where these facilities are.

Speaker Change: And so that kind of goes into the overall plan. And we're a little bit heavy right now, frankly. It's not unusual when we go through a slower economic environment to get a little ahead of the curve. You know, we are long-term.

Adam N. Satterfield: It's not unusual when we go through a slower economic environment to get a little ahead of the curve. You know, our long-term strategy is to have 20 to 25 percent excess capacity in the system. We're at about 30 percent today. And that's okay.

Adam Satterfield: We are long-term strategies. We like having 20 to 25% excess capacity in the system. We're at about 30% today. And that's okay. We're comfortable with that. Now what that may mean is exactly what you said; there may be facilities that are in process today. We will finish those facilities, and if the demand environment doesn't dictate that we go ahead and open them immediately, we'll finish the construction. We'll start the depreciation. And so forth with those facilities, but we'll wait until they're stronger demand to really justify the opening and all the incremental overhead a cost that goes along with those facilities once they're operational.

Speaker Change: Strategy is we like having 20 to 25% excess capacity in the system. We're at about 30% today.

Adam N. Satterfield: We're comfortable with that. Now, what that may mean is exactly what you said. There may be facilities that are in the process today. We will finish those facilities. And if the demand environment doesn't dictate that we go ahead and open them immediately, we'll finish the construction, start the depreciation, and so forth of those facilities. But we'll wait until there's stronger demand to really justify the opening and all the incremental overhead costs that go along with those facilities once they're operational. Not just the overhead, but there's configurations to the line haul network that have to happen. And generally, that negatively impacts load factors.

Speaker Change: And that's okay. We're comfortable with that. Now, what that may mean is exactly what you said. There may be facilities that are in process today. We will finish those facilities. And if the demand environment doesn't dictate that we go ahead and open them immediately,

Speaker Change: We'll finish the construction, we'll start the depreciation and so forth for those facilities, but we'll wait until there's stronger demand to really justify the opening and all the incremental overhead cost that goes along with those facilities once they're operational. Not just the overhead, but there's configurations to the line haul network.

Adam Satterfield: Not just the overhead, but there's configurations to the line haul network that has to happen, and generally that negatively impacts low factors. So that's something that these other carriers that are opening multiple facilities will be facing the incremental cost there, which is another reason why we don't anticipate seeing reductions in pricing or any pressures there. But so that's something that just goes into it, and we'll continue to look and evaluate. But overall, continuing the plan and we'll continue to the investments that we make are really just based on what we think the market share opportunities are in each of the respective areas.

Adam N. Satterfield: So that's something that these other carriers that are opening multiple facilities will be facing the incremental cost there, which is another reason why we don't anticipate seeing, you know, reductions in pricing or any pressures there. But so that's something that, you know, just goes into it. And we'll continue to look and evaluate. But overall, continuing the plan, and the investments that we make are really just based on what we think the market share opportunities are in each of the respective areas.

Speaker Change: that has to happen, and generally that negatively impacts.

Speaker Change: load factors. So that's something that these other carriers that are opening multiple facilities will be facing the incremental cost there.

Speaker Change: which is another reason why we don't anticipate seeing reductions.

Speaker Change: So that's something that just goes into it, and we'll continue to look and evaluate. But overall, continuing the plan, and we'll continue to... The investments that we make are really just based on what we think the market share opportunities are in each of the respective areas. And so we feel like we've got tremendous opportunity ahead, and thus we intend to continue to spend 10-15% of our revenues every year.

Adam Satterfield: And so we feel like we've got tremendous opportunity ahead, and thus we intend to continue to spend 10 to 15% of our revenues every year on total capital expenditures, the real estate, and then obviously on the fleet and the technology side as well to keep pace with our anticipated growth.

Adam N. Satterfield: And so, you know, we feel like we've got tremendous opportunities ahead. And thus, we intend to continue to spend 10 to 15% of our revenues every year on total capital expenditures, on real estate, and then obviously on the fleet and the technology side as well, to keep pace with our anticipated growth. Great, thank you so much. The next question is from Bruce Chan with Stiefel. Please go ahead.

Speaker Change: On total capital expenditures, the real estate and then obviously on the fleet and the technology side as well to keep pace with our anticipated growth.

Adam Satterfield: Great. Thank you so much.

Bruce Chan: The next question is from Bruce Chan with Steeple. Please go ahead.

Speaker Change: Great, thank you so much.

Speaker Change: The next question is from Bruce Chan with Stiefel. Please go ahead.

Bruce Chan: Hey, good morning, everyone. Adam, you know, wanted to follow up on the seasonality and the macro comments, or, you know, certainly Marty giving your discussion with customers. But, you know, obviously there's a lot of moving parts this year with the, you know, geopolitical situation and with the election. There's been some talk on the 3PL side about volume pull forward. So, you know, maybe just wondering if you've gotten any indication from customers to that effect, or if you think the demand and seasonality conversation seems to be pretty clear right now. Thank you. Yeah, as I've said before, about a third of our business is 3PL related, and those are basically the top customers that I was referring to.

Jizong Chan: Hey, good morning, everyone. Adam, you know, wanted to follow up on the seasonality and the macro comments, or, you know, certainly Marty, given your discussion with customers. But, you know, obviously, there's a lot of moving parts this year with the, you know, geopolitical situation and with the election. There's been some talk on the 3PL side about volume pull forward. So, you know, maybe just wondering if you've gotten any indication from customers to that effect, or if, you know, you think the demand and seasonality conversations seem to be pretty clear right now. Thank you.

Jizong Chan: Hey, good morning, everyone. Adam, you know, I wanted to follow up on the seasonality and the macro comments or, you know, certainly Marty, given your discussion with customers.

Marty: But obviously there's a lot of moving parts this year with the geopolitical situation and with the election.

Marty: There's been some talk on the 3PL side about volume pull forward, so...

Speaker Change: You know, maybe just wondering if you've gotten any indication from customers to that effect or if you think the demand and seasonality conversations seem to be pretty clear right now. Thank you.

Adam N. Satterfield: Yeah, as I've said before, about a third of our business is 3PL related, and those are basically the top customers that I was referring to. And most of those that come in here are, you know, giving us new opportunities to go in with them and handle their business. And for the most part, they're, they're super positive.

Speaker Change #100: Yeah, as I've said before, about a third of our business is 3PL related and those are basically the top customers that I was referring to.

Bruce Chan: And most of those that come in here are, you know, giving us new opportunities to go in with them and handle a bit of business. And for the most part there, they're super positive. We have, you know, a set of 3PLs in here this morning that I've already talked to, and they're super positive, and they've got growth opportunity. So, you know, I'm positive as well that it will, we'll see some, you know, some positive results from these customers. So, and hopefully next year in the geopolitical environment, if we see some change there, I think it'll be even more positive.

Speaker Change #101: Most of those that come in here are, you know, giving us new opportunities to go in with them and handle their business.

Speaker Change #102: For the most part, they're super positive. We have a set of three PLs in here this morning that I've already talked to, and they're super positive.

Kevin M. Freeman: We have, you know, a set of 3PLs in here this morning that I've already talked to, and they're super positive, and they've got growth opportunities. So, you know, I'm positive as well that we'll see some, some, you know, some positive results from these customers. So, and hopefully next year, in the geopolitical environment, if we, if we see some change there, I think, I think it'll be even more positive. So, Adam.

Speaker Change #102: They've got growth opportunities so...

Speaker Change #102: I'm positive as well that we'll see some positive results from these customers.

Speaker Change #102: and hopefully next year in the geopolitical environment, if we see some change there, I think it will be even more positive.

Bruce Chan: Now, I don't really have anything to add. I think that obviously any time there's an election year, that creates uncertainty and usually puts pressure, you know, on the overall sip and environment. And we've seen that this year, on top of a slower industrial economy in general. So, you know, I think that's something that'll just be one more measure of uncertainty that will soon be put to bed, you know, whatever direction it goes. But, you know, I think just broadly speaking, you know, if we start having clarity on some of the macro factors that are impacting business owners and the decisions that they make about expanding their businesses and so forth.

Adam N. Satterfield: Now, I don't really have anything to add. I think that, obviously, anytime there's an election year, that creates uncertainty and usually puts pressure, you know, on the overall shipping environment. And we've seen that this year on top of a slower industrial economy in general. So, you know, I think that's something that will soon be put to bed, you know, whatever direction it goes. But, you know, I think just broadly speaking, if we start having clarity on some of the macro factors that are impacting business owners and the decisions that they make about expanding their businesses and so forth, then we can make changes from an interest rate environment that helps and helps people and the consumer. We're still a consumer-driven economy.

Speaker Change #102: [inaudible]

Speaker Change #103: Now, I don't really have anything to add. I think that, obviously, any time there's an election year, that creates uncertainty.

Speaker Change #103: and usually puts pressure on the overall shipping environment, and we've seen that this year.

Speaker Change #103: I'm on top of a slower.

Speaker Change #103: Kevin Freeman, Drew Andersen, Kevin Freeman, Unknown Executive

Speaker Change #103: Start having clarity on some of the macro factors that are impacting business owners and the decisions that they make about expanding their businesses and so forth and

Bruce Chan: And we can make changes from an interest rate environment that helps and helps people in the consumer. We're still a consumer-driven economy. And so, you know, that's something that we can keep a healthy consumer out there. They're buying things that creates inventory that's got to be replenished. And, you know, that's the customer call that comes in to OD for a shipment to be picked up. So, you know, that will be the opportunity created. So, it's something that will continue to the measure and monitor and so forth. But we're, as Marty mentioned, we're seeing improved performance with our 3PO customers right now.

Speaker Change #104: We can make changes from an interest rate environment that helps and helps people and the consumer. We're still a consumer-driven economy, and so, you know, that's something that if we can keep a healthy consumer out there.

Speaker Change #105: They're buying things, that creates inventory that's got to be replenished, and that's the customer call that comes in to OD for a shipment to be picked up, so that will be the opportunity.

Speaker Change #105: created. So it's something that we'll continue to measure and monitor and so forth. But we're, as Marty mentioned, we're seeing improved performance with our 3PL customers right now. We had a little bit stronger retail related performance in the second quarter.

Adam N. Satterfield: But, as Marty mentioned, we're seeing improved performance with our 3PL customers right now. We had a little bit stronger retail-related performance in the second quarter. You know, industrial was okay, but it kind of reflects the market. The industrial environment, like the ISM metrics that we talked about earlier. So, but, you know, all of that, it's called a cycle for a reason.

Bruce Chan: We had a little bit stronger retail-related performance in the second quarter. Yeah, industrial was OK, but kind of reflects the, you know, the industrial environment, like the ISM metrics that we talked about earlier. So, but, you know, all of that, it's called a cycle for a reason. And, you know, it's easy to get caught up when you're in the down part of the cycle. We've managed through that. And we've been in the down part of the cycle for a lot longer than I had originally anticipated, but, you know, it will turn back to the positive at some point, and we're in a great position to capitalize when it does.

Marty: The industrial was okay, but kind of reflects the...

Marty: Kevin Freeman, Drew Andersen, Kevin Freeman, Unknown Executive

Adam N. Satterfield: And, you know, it's easy to get caught up when you're in the down part of the cycle. We've managed through that. And we've been in the down part of the cycle for a lot longer than I had originally anticipated. But, you know, it will turn back to the positive at some point.

Speaker Change #106: And the down part of the cycle for a lot longer than I had originally anticipated, but, you know, it will turn back to the positive at some point, and we're in a great position to capitalize when it does.

Adam N. Satterfield: And we're in a great position to capitalize when it happens. Yeah, thanks for that. The next question is from Jason Seidl with T.D. Cowan.

Jason Seidl: Thanks for that.

Jason Seidl: The next question is from Jason Seidl with TD Cowan. Please go ahead.

Speaker Change #107: Yeah, thanks for that.

Jason H. Seidl: Please go ahead. Thank you, operator. Hey, Marty. Hey, Adam.

Jason Seidl: Thank you, operator. Hey, Marty, hey, Adam. Thanks for squeezing me in here. Just wanted to follow up, Marty, to some of your comments. You mentioned that you've been talked to a lot of your big customers, and it's not all doom and gloom. I was wondering, sort of what areas those customers in is spread across the board, is this more consumer versus industrial. And the other one would be, you know, we've heard a lot about some business being pulled forward from season into the two queue. And I guess the start of pre-queue here. I'm wondering if you guys have seen any impacts from that, and how should we look at that going forward.

Speaker Change #108: The next question is from Jason Seidl with T.D. Cowan. Please go ahead.

Kevin M. Freeman: Thanks for squeezing me in here. I just wanted to follow up on some of your comments. You mentioned that you've been talking to a lot of your big customers, and it's not all doom and gloom. I was wondering sort of what areas those customers are in. Is this spread across the board?

Jason H. Seidl: Thank you, operator. Hey, Marty. Hey, Adam. Thanks for squeezing me in here.

Jason H. Seidl: I just wanted to follow up, Marty, to some of your comments. You mentioned that you've been talking to a lot of your big customers and it's not all doom and gloom. I was wondering...

Kevin M. Freeman: Is this more consumer versus industrial? And the other one would be, you know, we've heard a lot about some business being pulled forward from peak season into the 2Q and, I guess, the start of 3Q here. I'm wondering if you guys have seen any impacts from that, and how should we look at that? Well, you know, it's all over the board from a product or commodity standpoint. As you see on the news daily, you know, your hospitality and your travel markets are the ones that are really up over the industrial sector.

Jason H. Seidl: Sort of what areas those customers are in. Is this spread across the board? Is this more consumer versus industrial? And the other one would be, you know, we've heard a lot about some business being pulled forward from peak season into the 2Q and I guess the start of 3Q here. I'm wondering if you guys have seen any impacts from that and how should we look at that going forward?

Marty Freeman: Well, you know, it's all over the board from a product or a commodity standpoint. As you see on the news daily, you know, your hospitality and your travel markets are the ones that are really up over the industrial sector. But, you know, the commodities and opportunities that we have from these 3PLs and other customers, it's just all over the board. You know, the inventories are all over the board. You hear from some that say, you know, we still have a little inventory from last year. And others say our inventory is getting low. So we're going to start ordering product, whether that be domestically or overseas.

Kevin M. Freeman: But, you know, the commodities and opportunities that we have from these three PLs and other customers are just all over the board. You know, your inventories are all over the board. You hear from some that say, you know, we still have a little inventory from last year, and others say our inventory is getting low. So we're going to start ordering product, whether that be, you know, domestically or overseas. So it's just all over the board.

Speaker Change #115: Well, you know, it's all over the board from a product or commodity standpoint. As you see on the news daily, you know, your hospitality and your travel markets are the ones that's really...

Jason H. Seidl: Kevin Freeman, Drew Andersen, Kevin Freeman, Unknown Executive

Kevin M. Freeman: But, you know, like I said earlier, I'm still very positive that things have basically bottomed out, and I'm looking forward to, you know, better times. Okay, in terms of the pull forward, have you seen any impact? We've not really heard any material discussion of any pull forward or what not at this point. I haven't heard anyone from our sales team or any customer that we've had here in the office that's really spoken to that. Okay, perfect. Gentlemen, I appreciate the time as always. Thank you. And the final question today is from Jeff Kauffman with Vertical Research Partners. Please go ahead.

Jason H. Seidl: You know, we still have a little inventory from last year and others say our inventory is getting low, so we're going to start ordering product, whether that be...

Marty Freeman: So it's just all over the board.

Jason H. Seidl: domestically or overseas. It's just all over the board, but like I said earlier, I'm very positive that things have basically bottomed out and I'm looking forward to better times.

Marty Freeman: But, you know, like I said earlier, I'm still very positive that things have basically bottomed out and I'm looking forward to, you know, to better times. Okay.

Adam Satterfield: In terms of the pull forward, have you seen any impact? We've not really heard, you know, any material discussion of any pull forward or what not at this point. Or at least I've not heard anyone from our sales team or any customer that we've had here in the office that's really spoken to that. Yeah, me either. Okay. Perfect.

Speaker Change #110: Okay, in terms of the pull forward, have you seen any impact?

Speaker Change #111: We've not really heard, you know, any material discussion of any pull forward or whatnot at this point.

Speaker Change #112: I've not heard anyone from our sales team or any customer that we've had here in the office that's really spoken to that.

Unknown Executive: Gentlemen, appreciate the time as always.

Jeff Kaufman: And the final question today is from Jeff Kaufman with Vertical Research Partners. Please go ahead.

Speaker Change #113: Okay, perfect. Gentlemen, appreciate the time as always.

Jeff Kaufman: Thank you very much, and thanks for your squeezing me in last year.

Speaker Change #113: And the final question today is from Jeff Kauffman with Vertical Research Partners. Please go ahead.

Jeffrey Asher Kauffman: Thank you very much, and thanks for squeezing me in last year. Marty, a bigger picture thought question. I'm just curious about your view.

Jeff Kaufman: Marty, bigger picture thought question.

Jeffrey Asher Kauffman: Thank you very much and thanks for squeezing me in last year. Marty, bigger picture thought question. I'm just curious your view.

Jeff Kaufman: I'm just curious. Your view. If I look at the ATA LTL tonnage index, it's down about 8%. And a year ago, before yellow, the volumes of the publicly traded LTL carriers were tracking more closely to that. You know, since yellow happened, the publicly traded group is showing kind of flat up to percent tonnage. But the ATA tonnage index is still showing down about 8. Is there something going on? Like, why would it diverge so much? And is there something going on maybe where the smaller LTL carriers might be struggling a little bit more than you and some of your larger peers?

Kevin M. Freeman: If I look at the ATA LTL tonnage index, it's down about 8%. And a year ago, before the recent downturn, the volumes of the publicly traded LTL carriers were tracking more closely to that. You know, since yellow happened, the publicly traded group is showing kind of flat up 2% tonnage, but the ATA tonnage index is still showing down about 8%. Is there something going on here? Like, why would it diverge so much?

Jeffrey Asher Kauffman: If I look at the ATA LTL tonnage index, it's down about 8%.

Speaker Change #118: A year ago, before Yellow, the volumes of the publicly traded LTL carriers were tracking more closely to that, you know, since Yellow happened.

Speaker Change #116: The Publicly Traded Group is showing kind of flat up 2% tonnage, but the ATA tonnage index is still showing down about 8. Is there something going on, like why would it diverge so much, and is there something going on maybe where the smaller LTL carriers...

Kevin M. Freeman: And is there something going on maybe where the smaller LTL carriers might be struggling a little bit more than you and some of your larger peers? Can you help me kind of bridge this gap? Well, I think probably what you saw when YRC went out of business was that, you know, customers were struggling to find ways to move that freight, and you know, and some of it went, and not a large portion of it, but some of it went to your smaller freight forwarders, air freight forwarders, smaller logistics companies. And I think that's where some of that has gone. And, you know, those guys basically don't have any assets, so they're handling it at a lower rate.

Jeff Kaufman: Can you help me kind of bridge this gap?

Speaker Change #117: might be struggling a little bit more than you and some of your larger peers. Can you help me kind of bridge this gap?

Marty Freeman: Well, I think probably what you saw in Waller 3 when out of business is that, you know, customers were struggling to find ways to move that freight. And some of it went, and not a large portion of it, but some of it went to your smaller freight forwarders, air freight forwarders, smaller logistic companies. And I think that's where some of that has gone. And, you know, those guys basically don't have any assets. So they're handling it at a lower rate. And I think some of that business moved to full truckload carriers as the economy started to slow.

Speaker Change #119: Well, I think probably what you saw when YRC went out of business is that, you know, customers were struggling to find ways to move that freight and, you know, and some of it went and not a large portion of it, but some of it went to your smaller freight forwarders.

Speaker Change #117: Air Freight Forwarders, Smaller Logistics Companies, and I think that's where some of that has gone, and you know, those guys basically don't have any assets, so they're handling it at a lower rate.

Kevin M. Freeman: And I think some of that business moved to full truckload carriers as the economy started to slow. And as I've said before, when your economy starts to pick back up, the LTL industry will benefit from that, even from the full truckload industry, because we saw some of that freight moved to those full truckload carriers as it relates to stop-offs, and you know once those four truckload carriers begin to get busier and their capacity gets tighter, that freight will move back toward the LTL industry. So I think that business has moved a little bit everywhere based on price, and that's how I see it. That's the only way I can explain it.

Speaker Change #117: and I think some of that business moved to full truckload carriers as the economy started to slow. And as I've said before, when your economy starts to pick back up, you're...

Marty Freeman: And as I said before, when your economy starts to pick back up, the LTL industry will benefit from that, even from the full truckload industry because we saw some of that freight move to those full truckload carriers as it relates to stopalls. And once those full truckload carriers begin to get busier and the capacity gets tighter, that freight will move back toward the LTL industry. So I think the business moved a little bit everywhere based on price. And so that's how I see it. That's the only way I can explain.

Speaker Change #117: The LTL industry will benefit from that, even from the full truckload industry because we saw some of that freight move to those full truckload carriers as it relates to stop-offs.

Speaker Change #117: Once those four truckload carriers begin to get busier and their capacity gets tighter, that freight will move back toward the LTL industry. So I think the business moved a little bit everywhere based on price.

Marty Freeman: So the bigger point I'm going for here is, as you mentioned earlier, you know, you've got the PMI down in negative territory right now, industrial production is kind of flat-ish. Your 50-60% industrial, when we look at your tonnage growth of 2%, and you're not chasing any yellow business, the industry is probably a lot weaker in aggregate than what the five or six publicly traded truckload companies are reporting. But that 2% tonnage growth actually is stronger than the industry appears to be if we look at it through a broader lens and not just the lens of the publicly traded guy.

Speaker Change #117: And so that's how I see it. That's the only way I can explain it.

Kevin M. Freeman: So the bigger point I'm going for here is, as you mentioned earlier, you have the PMI down in negative territory right now, industrial production is kind of flattish, and you're 50-60% industrial. When we look at your tonnage growth of 2% and you're not chasing any yellow business, the industry is probably a lot weaker in aggregate than what the five or six publicly traded truckload companies are reporting that that 2% tonnage growth actually is stronger, uh... than the industry appears to be if we look at it through a broader lens and not just the lens of the publicly traded companies.

Speaker Change #120: So the bigger point I'm going for here is, as you mentioned earlier, you know, you got the PMI down in negative territory right now. Industrial production is kind of flat-ish.

Speaker Change #121: 50-60% industrial, when we look at your tonnage growth of 2% and you're not chasing any yellow business, the industry is probably a lot weaker.

Speaker Change #122: in aggregate than what the five or six publicly traded truckload companies are reporting, that that 2% tonnage growth actually is stronger than the industry appears to be if we look at it through a broader lens and not just the lens of the publicly traded guys.

Marty Freeman: Yeah, like you said, it's hard to know as we don't have access to all the private carriers, if you will. But we think some of that business may have gone there. But I think everyone's just been facing the challenge of the slower economy. And so, you know, that business, it's hard to trace through when Yellow did 50,000 shipments per day, and you just look at it. You know, I did the comparison; I'm looking at second quarter '23 numbers and most recently compared them to the first quarter '24 for at least the publicly traded carriers, which are 65 to 70% of the industry's revenue.

Kevin M. Freeman: Like you said, it's hard to know as we don't have access to all the information. The Private Carriers, if you will, but, you know, we think some of that business may have gone there, but, you know, I think everyone's just been facing the challenge of the slower economy and so, you know, with that business, it's hard to trace through when Yellow did 50,000 shipments per day, and you just look at, you know, I did the comparison. I'm looking at second-quarter 23 numbers and most recently But, you know, trying to trace through and figure out where all those shipments went and how they're being handled, and, you know, in what mode are they being handled by, you know, is a tough task.

Speaker Change #122: [inaudible]

Speaker Change #123: Like you said, I mean, it's hard to know as we don't have access to all the private carriers, if you will. But, you know, we think some of that business may have gone there.

Speaker Change #124: I think everyone's just been facing the challenge of the slower economy and so, you know, it's

Speaker Change #124: That business, it's hard to trace through when Yellow did 50,000 shipments per day.

Speaker Change #125: I did the comparison, I'm looking at second quarter 23 numbers and most recently compared them to the first quarter 24 for at least the publicly traded carriers, which are 65-70% of the industry's revenue.

Marty Freeman: But, you know, trying to trace through and figure out where all those shipments went and how they're being handled and, you know, what motor they've been handled by, you know, is a tough task. But, you know, the thing that we take away and what I mentioned earlier is, if economically it made sense for those shippers to move their freight within the LTL environment, sharing the cost, leveraging an LTL carrier's network. Sharing the cost on smaller shipment sizes with other shippers within the environment, all the benefits of moving freight by LTL that exist, which creates, we think, long-term opportunity for our industry. You know, those shipments are going to return and they will be there and available again.

Speaker Change #125: But, you know, trying to trace through and figure out where all those shipments went and how they're being handled.

Speaker Change #125: What mode are they being handled by is a tough task, but the thing that we take away, and what I mentioned earlier is

Adam N. Satterfield: But, you know, the thing that we take away, and what I mentioned earlier, is if economically it makes sense for those shippers to move their freight within the LTL environment, sharing the cost, leveraging an LTL carrier's network, sharing the cost on smaller shipment sizes with other shippers within the environment, all the benefits of moving freight by LTL that exist, which creates, we think, a long-term opportunity for our industry. You know, those shipments are going to return, and they will be there and available again, and so that's why we continue to believe that our industry, one, will be increasing.

Speaker Change #125: If economically it made sense for those shippers to move their freight within the LTL environment.

Speaker Change #125: Sharing the cost, leveraging an LTO carriers network.

Speaker Change #125: sharing the cost on smaller shipment sizes with other shippers.

Speaker Change #125: In the environment, all the benefits of moving freight by LTL that exist.

Speaker Change #125: which creates, we think, long-term opportunity for our industry.

Speaker Change #125: You know, those shipments are going to return and they will be.

Marty Freeman: And so that's why we continue to believe that our industry one will be increasing. We'll get back to the levels where we were in 21, and I believe we'll grow further beyond the air. And we're in an environment that I think we'll end up with, you know, who knows what the final capacity number will be, but, you know, at this point it looks like total industry capacity could be down 10% or maybe even more from where we were at that 21 period. So, you've got more volumes and less capacity overall that exist, and there may still be a little bit of shuffling around, you know, with those shipments and ultimately finding a home once the market tightens up and everyone gets really busy again.

Adam N. Satterfield: We'll get back to the levels where we were in 21, and I believe we'll grow further beyond there, and we're in an environment that I think we'll end up with, you know, who knows what the final capacity number will be, but, you know, at this point, it looks like total industry capacity could be down 10% or maybe even more from where we were in that 21 period. So, you've got more volumes and less capacity overall, and there may still be a little bit of shuffling around, you know, with those shipments and ultimately finding a home once the market tightens up and everyone gets really busy again.

Speaker Change #125: Bear and available again, and so that that's why we continue to believe that that our industry won

Speaker Change #125: We'll be increasing. We'll get back to the levels where we were in 21 and I believe we'll grow further.

Speaker Change #125: Beyond Layers

Speaker Change #125: And we're in an environment that I think we'll end up with, you know, who knows what the final capacity number will be.

Speaker Change #126: You know at this point it looks like total industry capacity could be down 10% or maybe even more from where we were at that 21 period. So you've got more volumes and less capacity overall.

Speaker Change #126: that exist and they're...

Speaker Change #126: may still be a little bit of shuffling around, you know, with those shipments and ultimately finding a home once the market tightens up and everyone gets really busy again.

Marty Freeman: You know, I think that that's when you'll see who's really got the best long-term strategy, who has got the best service, the best value, network capacity, people capacity, equipment capacity. I think when you look at it, all those factors and to deliver the best value, I think the answer is just clearly all demanding. And so that's where we're excited about what our well internal opportunities are and think that we will continue to win market share and ultimately create incremental shareholder value.

Adam N. Satterfield: You know, I think that's when you'll see who's really got the best long-term strategy, who has got the best service, the best value, network capacity, people capacity, and equipment capacity. And I think when you look at all those factors and who delivers the best value, the answer is just clearly Old Dominion, and so that's why we're excited about what our long-term opportunities are and think that we will continue to win market share and ultimately create incremental shareholder value.

Speaker Change #126: I think that's when you'll see who's really got the best long-term strategy, who has got the best service, the best value.

Speaker Change #127: Network capacity, people capacity, equipment capacity. I think when you look at all those factors and who delivers the best value, I think the answer is just clearly Old Dominion. And so that's why we're excited about what our long-term opportunities are.

Unknown Executive: Thank you for your insight.

Adam N. Satterfield: Thank you for your interest. This concludes our question and answer session. I would like to turn the conference back over to Marty Freeman for any closing remarks. Thank you all for your participation today. We appreciate your questions and please feel free to give us a call if you have anything further. And I hope you have a good day and a good rest of your summer.

Speaker Change #127: I think that we will continue to win market share and ultimately create incremental shareholder value.

Marty Freeman: This concludes our question and answer session.

Speaker Change #128: Thank you for your insight.

Marty Freeman: I would like to turn the conference back over to Marty Freeman for any closing remarks. Thank you all for your participation today. We appreciate your questions, and please feel free to give us a call if you have any. Thanks further, and I hope you have a good day and a good rest of your summer. Thanks.

Speaker Change #128: This concludes our question and answer session. I would like to turn the conference back over to Marty Freeman for any closing remarks.

Kevin M. Freeman: Thank you all for your participation today. We appreciate your questions and please feel free to give us a call if you have anything further. And I hope you have a good day and a good rest of your summer, thanks.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Kevin M. Freeman: Thanks. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: ...

Operator: You may now disconnect.

Speaker Change #129: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.